Thailand Expected to Join Southeast Asia Policy Easing

[Jacob Maslow]

HSBC is expecting Thailand to reduce interest rates by 25 – 50 basis points by March 11^th. The Finance Minister states otherwise.

Easier policies are coming to Southeast Asia. Indonesia reported that they would introduce a rate cut on Tuesday. Singapore started the trend in January. The reduction in interest rates is an attempt to help spur growth in declining Asian economies.

Thailand is expected to announce a reduction in interest rates within the next month. Initial reports show that Malaysia and the Philippines will also reduce interest rates before the end of the year. The reductions are an attempt to support economies that had little to no growth during 2014.

Thailand, the second-largest economy in Asia, had growth of just .07% in 2014, and the country’s currency has now slipped into deflation. The Bank of Thailand wants to cut rates, but recommends that a lift in spending will help revive the economy. Concerns loom that borrowing cost reductions will cause credit bubbles. Currently, 85% of the country’s GDP comes from household debt.

The Bank of Indonesia stated that the reduction in interest rates came after the country’s inflation outlook estimates were released. A drop in fuel prices was a major factor as well. A cut of 25 points was given by the bank.

International Monetary Fund released their 2014 findings in January. The fund found that the 5 main economies of Southeast Asia will grow by only 4.5% last year. This is the slowest growth since 2009.

HSBC suggested during a company meeting that Thailand will report rate cuts on March 11^th.

Alternative reports from the Finance Minister of Thailand on Wednesday stated that rate cuts of 25 – 50 basis points is off the table. The minister stated that these cuts would not spur growth and instead cites that increased government spending is the main agenda in 2015.

Expect further reports to be announced in the next month.

-- 2015-02-19

[Somtamnication]

What exactly are they going to ease?

[smedly]

The finance ministry should have nothing to do with interest rates

[Srikcir]

HSBC is at fault for thinking the Junta government will do the right thing to reduce interest rates that will encourage more capital invesment. The minister is completely wrong that these cuts would not spur growth. And thus far, he is wrong that the government has increased spending that could stimulate the economy. The Junta is opposed to use of debt for the economy and that is why it only provides short-term handouts and "gifts."

Shame on HSBC to believe that the Junta could actually reverse the punishing effect that it and the PDRC have made on the economy. GDP growth for 2015 will be 2-3% while neighboring countries will enjoy 4%+ growth. I wonder if in 2015 we will witness immigrant Thais going to Thailand's neighbors for work?

[ggt]

Financial institution's intervention into commerce and money supply is happening simultaneously all over the world...the end result is an overwhelming addition to a countries debt followed by more money printing and lowering interest rates...

The only winners are the financial institutions themselves...stocks are artificially inflated...banks and stock-marketing firms bet this money on near worthless bonds and derivatives...

Japan has been following this line of thinking for years...their national debt exceeds their ability to pay...as does the US...soon to come Europe and apparently Asia will be following suite...

The end game is a possible total collapse of the world's economies...no one knows the outcome of the money printing...lowered interest...experiment...the world has never experienced this outlandish financial manipulation behavior before...

At the very least...fiat currency...paper money...will become almost worthless as no one will accept a piece of paper which holds no real value...from a country which is morally, ethically, financially, and economically bankrupt...

Banks in some countries will be required to close their doors....ATM machines will not work...while countries try to work out a solution to their manufactured crisis...

Best to have an appropriate amount of cash tucked away to weather-the-coming-storm...placing your savings in commodities...real assets...like property and precious metals to preserve your hard earned wealth...

I am not a financial advisor...nor do I have a crystal ball...so make your own decisions based on your experience and knowledge...

Good Luck!

Edited February 19, 2015 by ggt

[Cake Monster]

Thailand has already stated that they will find any reduction in interest rates impossible, due to massive amounts of personal outstanding loans and debt, which are currently running at 89% of GDP, that is if official figures are to be believed.

The only course of action for the Thai Authorities is to spend their way out of this situation by useing " stimulus measures " such as Government spending programs on infrastructure, and " give away " programs in the hope that these will stimulate growth.

An awful lot of these measures will be needed to achieve a 4-5 % grown in 2015 as forcast, and with a grossly a uncompetetive economy now that the rest of SE Asia has reduced rates, growth in 2015 is more likely to be below 2% again.

[Pakaty]

HSBC is expecting Thailand to reduce interest rates by 25 – 50 basis points by March 11^th. The Finance Minister states otherwise.

They actually did it. Thai time, waited as long as they could.