Thailand's PM Urges Interest Rate Cuts To Boost Economy

[webfact]

Picture courtesy: The Nation

 

At a pivotal mobile cabinet meeting in Songkhla, Prime Minister Paetongtarn Shinawatra urged the Bank of Thailand to cut interest rates to alleviate financial stress on the populace. This motion aims to drive economic activity by encouraging lending and stimulating market liquidity.

 

The appeal follows the country's economic challenges, where a stark contrast exists between the National Economic and Social Development Council's growth forecast of 2.8% for 2025 and the government’s ambitious target of 3.5%. The Prime Minister is confident that through collaboration with financial institutions, her administration can achieve this growth target by enhancing economic momentum.

 

Despite broad-based growth in late 2024, Paetongtarn acknowledged a shortfall in private investments, primarily attributed to restricted credit access. Small and Medium Enterprises (SMEs), which represent approximately 75% of Thailand's business landscape, have been particularly affected, struggling to obtain necessary funding.

 

“Private sector development has stagnated over the years, with certain traditional industries finding it particularly tough to secure investment,” Paetongtarn remarked.

Key proposals from the meeting included urging commercial banks to ramp up lending activities to both businesses and the general public, a move seen as crucial for invigorating Thailand’s economic backbone. The Prime Minister emphasised that such fiscal strategies are essential for achieving sustained economic improvement.

 

In an effort to further boost economic activity, the government has also launched initiatives to promote tourism. This plan targets both primary tourist hubs and less-visited secondary cities, aiming to disperse economic benefits more evenly across the country.

 

Moreover, the Prime Minister's recent international excursions underline a commitment to attracting foreign investment. Such investments are perceived as vital for bolstering economic recovery efforts in the wake of global financial challenges.

 

The mobile cabinet session marked a significant occasion with ministers touring Phatthalung and Songkhla provinces. These excursions are not just symbolic; they are intended to provide a hands-on evaluation of ongoing governmental projects and foster dialogues with local communities about policy implementations.

 

With the Monetary Policy Committee scheduled to meet on 26th February, the financial sector anticipates decisive actions that could shape Thailand's economic trajectory in the coming months.

 

Should interest rates be reduced, it could translate to increased household savings and investment capabilities, ultimately invigorating the broader Thai economy in its quest for growth. In Thai Baht terms, aligning the economy's pace with the set targets remains a tangible prospect hinged on effective policy execution, reported The Nation.

 

-- 2025-02-20

 

 

[kingstonkid]

Silly me.  I thought that the fact that the people were borrowing and unable to pay was the reason , Now you are going to make it easier and induce banks to lend more money. LOL

[lordgrinz]

So the way to fix out of control debt is to cut interest rates so they can "drive economic activity by encouraging lending"?! 🤔

[natway09]

She still on this party line rubbish.

Nevermind, just means all the farangs will pay less tax on their savings.

[PETERTHEEATER]

A large donation to the Treasury from the Shinawatra clan's sovereign wealth fund would also boost the economy.

[Sir Dude]

Never happen, certain individuals that own huge amounts of shares in banks like SCB will never agree to that, and it's not like they can be challenged... anyone who thinks a central bank somewhere like this is independent, is drinking way too much kool-aid.

[realfunster]

2 hours ago, kingstonkid said:

Silly me.  I thought that the fact that the people were borrowing and unable to pay was the reason , Now you are going to make it easier and induce banks to lend more money. LOL

That might be part of it but lenders could/should introduce more stringent checks.

 

No point punishing everyone with high interest rates as some people default on loans. The market will work its magic - if you lend recklessly-  you shall receive your comeuppance. 
 

Anyway, the economy has been in a coma for a decade, massively underperforming regional peers. Something drastic needs to be done. 

[realfunster]

53 minutes ago, Sir Dude said:

Never happen, certain individuals that own huge amounts of shares in banks like SCB will never agree to that, and it's not like they can be challenged... anyone who thinks a central bank somewhere like this is independent, is drinking way too much kool-aid.

The banks work on a spread from the BOT base rate, so I don’t see why they would be against lowering the BOT base rates ? They will get their +3% spread whether base rates are 1%, 3% or 5%. 

In fact, they will prefer lower rates as that increases the amount of lending in the market = more loans to get the spread on = more revenue.

 

[blaze master]

You know what else would boost the economy.

 

Clean air. 

[alien365]

I think the current interest rates on mortgages are hurting a lot of people. It's ridiculous how much of the payments are interest. 

[outsidetrader]

17 hours ago, blaze master said:

You know what else would boost the economy.

 

Clean air. 

Spot on with the Clean Air .Totally Agree