Thai-ing up rates: BoT bosses feel heat over 2% cap warning

[webfact]

Picture courtesy of the Bank of Thailand

 

by Bob Scott

Bank of Thailand (BoT) bosses are under fire after warnings from the top brass at the National Economic and Social Development Council that their key policy rate should not breach the 2% mark.

 

BoT chief advisor Supavud Saichuea insisted keeping the lid on interest rates is crucial, given the country’s inflation target and sluggish GDP growth.

 

Speaking at a high-profile seminar hosted by the Kiatnakin Phatra Financial Group, Supavud dished out some cold, hard numbers.

 

“With inflation set between 1-3%, we shouldn’t see rates topping 2%.

The pundit is all for a real policy rate hovering between 0-1%, matching the GDP growth rate that’s struggling to creep past 3%.

“Back in the day, 2007 to 2014, to be precise, both inflation and real policy rates played nice at around 2%, while GDP strutted its stuff at 3.5%.”

 

Policy rate cut

 

But the financial heatwave of 2024 saw inflation plummet to a chilly 0.4%, with experts forecasting it to climb back to a comfy 2% by year’s end.

 

Hitting the central bank’s nerve, Supavud hinted that a policy rate cut could be in the cards.

 

“The central bank’s strong monetary policy stance is about preparing for stormy economic weather ahead. However, putting off rate adjustments while waiting for clearer signals might just spell trouble for our economy and borrowers alike.”

 

The potential consequences of a rate standoff have Supavud cautious about economic downturns later this year, amid global uncertainties from none other than US President-elect Donald Trump and his curveball policies.

“With external forces in play, achieving a 3% GDP growth target is looking like a tall order.”

 

Trump’s so-called ‘2.0 policies,’ notably his tariffs, are expected to stir the pot, aggravating trade tensions between the US and China, reported Bangkok Post.

 

Supavud foresees this adding a layer of anxiety for Thailand, as exports might feel the pinch in late 2025. His advice? Thailand and its agile businesses need to pivot their strategies pronto.

 

On a brighter note, while tensions rise, there might be a silver lining in the shape of opportunities in Thailand’s export trade with the Chinese giant, especially within the bustling food and services sectors, said Supavud.

“We’re outpacing our neighbours with food exports to China.”

 

Meanwhile, the ever-reliable services sector, bolstered by tourism, remains a cornerstone of the Thai economy.

 

The government’s investment in casino-based entertainment complexes may pump up tourism, investment, and jobs in the longer haul. Yet Supavud urges caution, reminding leaders to keep an eye on potential social ramifications.

 

Source: The Thaiger 

-- 2025-01-15

 

 

[Srikcir]

3 hours ago, webfact said:

Trump’s so-called ‘2.0 policies,’ notably his tariffs, are expected to stir the pot, aggravating trade tensions between the US and China

"Overview In October 2024, United States exported $1.37B and imported $6.18B from Thailand, resulting in a negative trade balance of $4.81B." https://oec.world/en/profile/bilateral-country/usa/partner/tha

As per 45th POTUS Trump's tariff wars and consistent with his recent trade threats against Canada wherein the US has a negative trade balance, it's likely Trump will again apply tariffs against all nations wherein the US has negative trade balances, ie., Thailand.

A nation that has a free trade agreement (FTA) with the US has no assurance that Trump will respect such trade agreements. Such is the case of his recent threats of applying higher tariffs against Canada and Mexico in violation of his own US congressionally-approved USMC trade agreement when Trump was 45th POTUS.

[Justanotherone]

inflation 1-3% ? in what world, everything is up 20-25%