Bot Chief Shrugs Off Possible Sharp Interest Cut

[george]

BoT chief shrugs off possible sharp interest cut

BANGKOK: -- Bank of Thailand (BoT) Governor Tarisa Watanagase on Tuesday shrugged off mounting pressure for the central bank to sharply reduce the policy interest rate, saying the interest cut might not help stimulate spending as many expected.

She said attempting to use monetary policy to stimulate the economy must be applied with caution because the sharp interest cut as advised by many parties could have a positive psychological effect, but might not immediately result in boosted spending.

Changes of monetary policy in the United States and Europe are necessary because they are the origin of the global financial crisis, she said.

The western economies need to cut interest rates to stimulate spending, but in Thailand the situation is different because it is not a root cause of the problem, she said.

Accordingly, relaxation of monetary policy by applying an interest rate cut might be less effective than using fiscal policy to stimulate the economy.

Although the policy interest rate is likely to drop soon, Mrs. Tarisa said, it will take many months for interest rates offered in the banking system to decline accordingly.

In addition, reducing interest will not guarantee that people will spend more. Whether the public will increase its spending or not depends on many factors, including confidence in the overall economy, she said.

-- TNA 2008-11-26

[cloudhopper]

Another idiot at the controls of a central bank...

[pab]

Surely this "head in the sand" attitude cannot persist much longer !!! Some of Mrs. Tarisa's statements are absolutely laughable let alone ignorant of the current world economic crisis situation and the impact on Thailand.

[Seneque]

Definitely shows that she is not in 'control' and will let the boat sink sooner rather than later ... !

[Chang_paarp]

Still no "shaking head in disbelief" smilie.

Changes of monetary policy in the United States and Europe are necessary because they are the origin of the global financial crisis, she said.

The western economies need to cut interest rates to stimulate spending, but in Thailand the situation is different because it is not a root cause of the problem, she said.

Thailand will feel the pinch of this in the coming months, especially when fallout the farce at Swampypoon washes up.

[Ricardo]

Please don't blame her ... she is merely following orders. No matter how stupid they are. Ask yourself who benefits from a strong Baht, economic disruption for exporters & tourism, and a hands-off approach to economic management.

[CPH]

Dont worry, the PAD will do the work to make the Thai Baht fall. No need for interest cut, just wait a few month.

[Martin]

All these calls for interest rate CUTS are badly thought out.

They rest on what happened in 'overheatings' that corrected by'recessions' when (for the past 200 years) economies were being underpinned by successive discoveries of deposits of fuels and ores that were easily worked. Particularly, discoveries of oil.

We are now in a different ballgame. Those days that we enjoyed are going fast, or (in some ways) already gone. This recession is completely different, in that it has to be adjusted to permanently, not just temporarily.

There are strong arguments for 'getting on with the pain' lest masking its symptoms makes for a harder situation later than would occur if those symptoms were not masked for a little while.

'Getting on with the pain' would point to PUTTING UP interest rate. In fact, it may be the only way to reduce the dangerous indebtnedness that has resulted in this debt crunch (for which the term 'credit crunch is but a euphemism).

Teresa Watangase is no idiot. She is, in fact, a highly knowledgeable woman, with (as we say in Yorkshire) 'a lot of oil in her can'.

I know it goes against the prejudices of many members of ThaiVisa, but top Thais are as bright as top Brits or top Yanks. They work in a different culture, that's all.

[Mosha]

"Teresa Watangase is no idiot. She is, in fact, a highly knowledgeable woman, with (as we say in Yorkshire) 'a lot of oil in her can'."

Never heard that one, in 48 years in Tykeland

[tso310]

I know it goes against the prejudices of many members of ThaiVisa, but top Thais are as bright as top Brits or top Yanks. They work in a different culture, that's all.

Probably true.