IMF Urges Thailand Rate Cuts That Central Bank Says Not Needed

[webfact]

IMF Urges Thailand Rate Cuts That Central Bank Says Not Needed
by Chris Blake

Inflation rate will probably undershoot target, IMF says
Economy forecast to expand 3% this year, 3.2% in 2017

WASHINGTON: -- The International Monetary Fund called on policy makers in Thailand to cut interest rates in the face of a sluggish economy and low inflation, an approach that the central bank says isn’t necessary.

Thailand needs expansionary fiscal and monetary policies to help spur an economy that’s set to grow at a slower pace than most other nations in Southeast Asia, the Washington-based lender said in an e-mailed report on Wednesday.

“There is scope for further monetary easing,” the IMF said. A negative output gap, falling consumer prices and downside risks “warrant additional monetary accommodation,” it said.

Full story: http://www.bloomberg.com/news/articles/2016-06-08/imf-urges-thailand-rate-cuts-that-central-bank-says-not-needed

-- Bloomberg 2016-06-08

[worgeordie]

Cut the interest rates ,only helps people,companies,in debt,

if you have savings,the rates you receive won't even cover

inflation,also maybe the IMF,needs to send someone over

here,to see inflation is not as low as the Government says,

or what the IMF thinks it is.

regards Worgeordie

[seajae]

do they seriously expect any thai bank to give up some of their profit and make it easier for the customers, obviously the imf have no knowledge of the thai way of thinking.

[sharecropper]

On a related topic, did anyone hear a story last week that Thai Military Bank cut it's interest rates to zero, then when there was a massive run on the bank, with savers withdrawing funds, they cancelled the rate cut, blamed foreigners for not understanding something and restored their interest rate? I heard this from a Thai but it might be incorrect, hence my question. I've not seen anything in the news.

[SoilSpoil]

Kind of sick that in the global debt based economies inflation has become a key objective, while the poorest 4 billion people on this planet are getting poorer at increasing rate. When will this house of cards fall?

[Lannig]

There you go: http://www.thaivisa.com/forum/topic/922363-tmb-backtracks-on-zero-interest-rate-for-savings-accounts/

[sharecropper]

There you go: http://www.thaivisa.com/forum/topic/922363-tmb-backtracks-on-zero-interest-rate-for-savings-accounts/

Thanks a lot.

True then...

[NCC1701A]

IMF= Impossible Mission Force.

[bamukloy]

do they seriously expect any thai bank to give up some of their profit and make it easier for the customers, obviously the imf have no knowledge of the thai way of thinking.

Banks never loose out. If they did, the crooks in the US never would allow 0 rates.

I always wondered about what the tin foilers talked about a ' huge income shift'.

I believe its whats happening now. They are stealing money from retirees and savers and the middle class.

They are using OUR money for free to help others fall into debt.

but do the banks lend out money for free? Haha

[WhizBang]

What? Asking the Thai banks to cut their intrest rates? 55555555 No way, that would eat into their profits.

Silly foreigners, they just do not understand Thainess.

[12DrinkMore]

do they seriously expect any thai bank to give up some of their profit and make it easier for the customers, obviously the imf have no knowledge of the thai way of thinking.

Banks never loose out. If they did, the crooks in the US never would allow 0 rates.

I always wondered about what the tin foilers talked about a ' huge income shift'.

I believe its whats happening now. They are stealing money from retirees and savers and the middle class.

They are using OUR money for free to help others fall into debt.

but do the banks lend out money for free? Haha

Banks do not loan out savers' cash.

The zero rate interest policy is purely for the banking system as it keeps the number of defaults down to a minimum, no bank can handle more than about 10% loan defaults without going insolvent. It also encourages the peeps to take out even more debt, which is the banks' main product. They love to push as much down our throats as they can.

The IMF keeps all the Central Banks toeing the line.

If the Great US of A exhibited the same economic figures as Thailand, the Fed would be moving interest rates up. Work that one out.

So what is "outpur gap?". Which is always negative. Basically it means some <deleted> economist has a model that says "if the Thais worked harder, they could become better slaves and 'grow the GDP more'". What if people disagree, and want more leisure? No, you have to work harder and make more stuff, every year. Work that one out.

Here's another little gem.

"falling consumer prices". Although I haven't noticed them, basically the bankers are saying that we should not have more spending money in our pockets because we are able to spend less on rice, chicken and smart phones. So technological benefits, once the driver of economic progress and putting affordable products into peoples' hands, are no longer allowed to be beneficial. We should always have to pay more for the stuff we buy. Work that one out.

"downside risks" an utterly meaningless phrase. Nothing to work out.

I see that innovative new "products" are being brought out. The UK banks will now give you a 40 year mortgage, putting you into debt until well past retirement. Work that one out.

And Sweden has even gone as far as 150 year multi-generational mortgages. Putting your great-grandchildren into debt decades before the suckers take their first breath. Work that one out. In fact I would love to hear from a Swede why they would inflict that on the next three or more generations.

[HenryB]

IMF is controlled by George Soros and his likes this is plan to ruin the Baht He did it before

Arrest George Soros and save the world

[maewang99]

The full story references politics, rapid aging and low education quality. Notwithstanding the fascinating theorist speculation that the freedom loving Open Society founder George Soros may or may not control the world.... a world of 7 billion people.... maybe the IMF has something.

Edited June 8, 2016 by maewang99

[12DrinkMore]

The full story references politics, rapid aging and low education quality. Notwithstanding the fascinating theorist speculation that the freedom loving Open Society founder George Soros may or may not control the world.... a world of 7 billion people.... maybe the IMF has something.

All of which have been known for many years, and don't require the IMF to repeat.

[heybruce]

Lowering interest rates would weaken the baht, make exports more competitive and maybe attract tourists other than the Chinese.

Of course a weaker baht would be expensive for rich Thais transferring money out of Thailand.

Gee, I wonder why the Central Bank doesn't want to lower interest rates?

[elgordo38]

Cut the interest rates ,only helps people,companies,in debt,

if you have savings,the rates you receive won't even cover

inflation,also maybe the IMF,needs to send someone over

here,to see inflation is not as low as the Government says,

or what the IMF thinks it is.

regards Worgeordie

Every government in the world is lying about inflation.

[Srikcir]

No need to cut rates now.

Prayut has a 20-year plan for Thailand's economic recovery. On the plus side Thailand's lack of economic competitiveness will aid other ASEAN countries to higher GDP growth.

Practically, BoT needs to cut rates 0.5% now and possibly another 0.25% before October. But the Junta's reputation is on the line and with the upcoming referendum, rate cuts now will not make for a happy populace.

[Baerboxer]

The full story references politics, rapid aging and low education quality. Notwithstanding the fascinating theorist speculation that the freedom loving Open Society founder George Soros may or may not control the world.... a world of 7 billion people.... maybe the IMF has something.

Soros likes his own freedoms - and as far as he's concerned everyone else can kill his ass.

[Baerboxer]

No need to cut rates now.

Prayut has a 20-year plan for Thailand's economic recovery. On the plus side Thailand's lack of economic competitiveness will aid other ASEAN countries to higher GDP growth.

Practically, BoT needs to cut rates 0.5% now and possibly another 0.25% before October. But the Junta's reputation is on the line and with the upcoming referendum, rate cuts now will not make for a happy populace.

Thankfully you're not running the BoT, or finance minister or economics minister. So your "expertise" has no standing.

I didn't notice you calling for the Shins to stop their leeching rice scheme btw?

What have the IMF achieved? One dodgy French leader, followed by another dodgy French leader. Might as well toss a bag of bones in the air. Same chance as IMF being right about anything.

Edited June 8, 2016 by Baerboxer

[12DrinkMore]

No need to cut rates now.

Prayut has a 20-year plan for Thailand's economic recovery. On the plus side Thailand's lack of economic competitiveness will aid other ASEAN countries to higher GDP growth.

Practically, BoT needs to cut rates 0.5% now and possibly another 0.25% before October. But the Junta's reputation is on the line and with the upcoming referendum, rate cuts now will not make for a happy populace.

The general Thai populace could not care less about where the interest rates are.

So where do you think the huge economic boost will come from by sinking rates to under 1%?

[Winniedapu]

Thais know best.

Expect howls of protest from the junta-huggers: the IMF is no good, the IMF hates Thailand, Thaksin owns the IMF.

They'll be right on cue, as always *yawn*.

W

Edited June 8, 2016 by Winniedapu

[heybruce]

No need to cut rates now.

Prayut has a 20-year plan for Thailand's economic recovery. On the plus side Thailand's lack of economic competitiveness will aid other ASEAN countries to higher GDP growth.

Practically, BoT needs to cut rates 0.5% now and possibly another 0.25% before October. But the Junta's reputation is on the line and with the upcoming referendum, rate cuts now will not make for a happy populace.

The general Thai populace could not care less about where the interest rates are.

So where do you think the huge economic boost will come from by sinking rates to under 1%?

See post #15.

[12DrinkMore]

No need to cut rates now.

Prayut has a 20-year plan for Thailand's economic recovery. On the plus side Thailand's lack of economic competitiveness will aid other ASEAN countries to higher GDP growth.

Practically, BoT needs to cut rates 0.5% now and possibly another 0.25% before October. But the Junta's reputation is on the line and with the upcoming referendum, rate cuts now will not make for a happy populace.

The general Thai populace could not care less about where the interest rates are.

So where do you think the huge economic boost will come from by sinking rates to under 1%?

See post #15.

Aah, the old "beggar thy neighbour" approach, devalue the currency.

Which has only ever worked in the short term, never been particularly effective and leads to everybody being worse off in the end.

Take Greece as an example. Before the Euro they constantly devalued the Drachma, had consequently high inflation as they had to import most of their stuff and high interest rates tp try and contain things. They were still all just as poor as ever.

Luckily we have steadier hands on the helm in Asia and they avoid round after round of stupid competitive currency devaluation.

Any other benefit you can see in slashing the interest rates?

[Nasrullah]

By jeeez......For once i agree with what a thai 'official' has to say on whatever policy!....IMF are wrong as always....

Yes.....More government spending is a wise move-accompanied by structural changes....education,skills training etc etc....keeping rates unchanged helps balance

the economy as a whole........BTW....structural problems(sinful loaning worldwide as well)are the root cause of international economies

[Nasrullah]

The IMF needs to see more of this

[12DrinkMore]

By jeeez......For once i agree with what a thai 'official' has to say on whatever policy!....IMF are wrong as always....

Yes.....More government spending is a wise move-accompanied by structural changes....education,skills training etc etc....keeping rates unchanged helps balance

the economy as a whole........BTW....structural problems(sinful loaning worldwide as well)are the root cause of international economies

The IMF, the Fed and the US government are all there to protect and further the interests of the US of A. From their standpoint the IMF makes good advice. The mistake is to think that the IMF is some magnanimous organisation offering unbiased advice.

It is not all bad, they have kicked some bad ass, but on the other hand they have often created the problem in the first place.

You would have to be a little more clear about what issues you are addressing in the last sentence.

[heybruce]

No need to cut rates now.

Prayut has a 20-year plan for Thailand's economic recovery. On the plus side Thailand's lack of economic competitiveness will aid other ASEAN countries to higher GDP growth.

Practically, BoT needs to cut rates 0.5% now and possibly another 0.25% before October. But the Junta's reputation is on the line and with the upcoming referendum, rate cuts now will not make for a happy populace.

The general Thai populace could not care less about where the interest rates are.

So where do you think the huge economic boost will come from by sinking rates to under 1%?

See post #15.

Aah, the old "beggar thy neighbour" approach, devalue the currency.

Which has only ever worked in the short term, never been particularly effective and leads to everybody being worse off in the end.

Take Greece as an example. Before the Euro they constantly devalued the Drachma, had consequently high inflation as they had to import most of their stuff and high interest rates tp try and contain things. They were still all just as poor as ever.

Luckily we have steadier hands on the helm in Asia and they avoid round after round of stupid competitive currency devaluation.

Any other benefit you can see in slashing the interest rates?

Many people in Greece would like a return to those bad old days.

However in this case the IMF isn't advocating printing money to cause a major devaluation, just an interest rate cut to stimulate the economy and generate a little inflation. In case you haven't heard, deflation is considered a much greater risk to the world, and Thailand's, economy than inflation.

So, interest cut, small depreciation in the baht (perhaps to the point it was at 15 years ago), more competitive exports, more tourists, less risk of recessionary deflation, and a little inflation would reduce the pain of the high debt levels of the Thai people.

Or ignore the IMF and.... What is the benefit of maintaining things as they are?

[Strangebrew]

Right keep building condos for the masses, good job But on second thought who's going to buy them without a decent job to buy them? Some how I think Noah is having second thoughts about tossing the DoDo birds to make room for two Thai's. Well at least we get a good laugh.

Edited June 9, 2016 by Strangebrew

[12DrinkMore]

Aah, the old "beggar thy neighbour" approach, devalue the currency.

Which has only ever worked in the short term, never been particularly effective and leads to everybody being worse off in the end.

Take Greece as an example. Before the Euro they constantly devalued the Drachma, had consequently high inflation as they had to import most of their stuff and high interest rates tp try and contain things. They were still all just as poor as ever.

Luckily we have steadier hands on the helm in Asia and they avoid round after round of stupid competitive currency devaluation.

Any other benefit you can see in slashing the interest rates?

Many people in Greece would like a return to those bad old days.

However in this case the IMF isn't advocating printing money to cause a major devaluation, just an interest rate cut to stimulate the economy and generate a little inflation. In case you haven't heard, deflation is considered a much greater risk to the world, and Thailand's, economy than inflation.

So, interest cut, small depreciation in the baht (perhaps to the point it was at 15 years ago), more competitive exports, more tourists, less risk of recessionary deflation, and a little inflation would reduce the pain of the high debt levels of the Thai people.

Or ignore the IMF and.... What is the benefit of maintaining things as they are?

The Greeks have always been an economical basket case.

I have already answered the "competitive currency devaluation" road to riches fallacy. This can only ever be an inefficient short term bodge. There is also no reason to believe that a drop in the THB interest rate will cause anything but a small blip in the exchange rate. Japan went all the way to zero, currently monetises through the Bank of Japan every bit of government debt and still the JPY rises, much to the dismay of Abe.

It is also a fallacy to think that a devaluation in the THB would increase exports. That makes a few assumptions a main one being the supply of goods is flexible and there actually is more rice, shrimps, chicken, sugar available to be sold than could be sold at a slightly higher price. And that the "Lower Price * Higher Volume > Higher Price * Lower Volume".

Generally apart from populist government intervention in building rotting rice heaps, all available product is cleared internationally at a USD price determined by a huge market. If the THB dropped, it would, when the USD's are converted back to THB's put a bit more money into the large exporters' pockets. This would not be passed down the chain to farmer Somchai, who had already agreed a price in THB with the exporter.

Tourism. I do not think any tourists are all that worried by a few percent in currency movements. They are not that price sensitive. If the Thais could get a handle on tourist safety and stop killing people in speedboats, buses and beating the cr4p out of them by yobs, there would be more tourists coming.

You have bought into the Central Banking bu77shit on deflation.

Bankers primarily do not give s sh1t about jobs and the economy. All they want is the debt plus interest to be paid back.

Deflation in capital assets is anathema to them, as the whole of the shadow banking sector depends on borrowing against financial assets. If those assets fall in value, then they all get hot under the collar and we have another crisis. This is why the Fed, the BoE and ECB are supporting them.

The other deflation nonsense story is that if people think prices will fall, they will put off buying goods, which will reduce sales and cause production to go down, resulting in loss of jobs. Hands up all those who have actually put off buying something because the price might fall in a year. Doesn't happen. We all want today, on credit, instant gratification is way better than some perceived future price benefit. Loss of jobs is not going to come from deflation. Loss of jobs is going to come from robotics, the process is accelerating, 60,000 jobs lost here, another 45,000 there. Any job which is routine can and probably will be automated away.

The real banker horror of deflation is that if wages stick, then maybe the debts do not get paid back.

But back to inflation. Where, indeed, does it come from?

There is a certain amount of inflation through the cost of raw materials. But the big lie and widely accepted fallacy is that consumer price inflation can be almost directly controlled through the interest rates. There is no evidence that this is the case, it is, at best a third order effect. Check out Japan, Europe, USA, UK. If you follow the Central Banker's rhetoric over the last couple of years, you will notice that they talk about "setting expectations" and "anchoring inflation expectations".

This is the only f3ckin tool they have. As long as they can get people to believe that the Central Banking Crystal Ball is accurate ( ) then prices will rise.

It is all a mind game.

They are losing, as faith in their ability to control our thoughts is waning.

[12DrinkMore]

Many people in Greece would like a return to those bad old days.

However in this case the IMF isn't advocating printing money to cause a major devaluation, just an interest rate cut to stimulate the economy and generate a little inflation. In case you haven't heard, deflation is considered a much greater risk to the world, and Thailand's, economy than inflation.

So, interest cut, small depreciation in the baht (perhaps to the point it was at 15 years ago), more competitive exports, more tourists, less risk of recessionary deflation, and a little inflation would reduce the pain of the high debt levels of the Thai people.

Or ignore the IMF and.... What is the benefit of maintaining things as they are?

Missed out that.

Stability.

There is a major conflict between the financial industry and the rest of the economy. The finance lot make way more money when things are unstable.

But everybody else prefers a stable foundation on which to build. If the bankers continually use the blunt tool of interest rates to attempt control of everything, there is no stable framework and investments in manufacturing are not made.