Top Thai business group urges central bank to cut rates
Published Wed, Oct 2, 2024 · 04:18 PM
THAILAND’S leading business group on Wednesday (Oct 2) urged the central bank to cut interest rates, backing the government’s repeated calls for monetary easing, and flagged concern about the impact on exports from a rapidly appreciating baht.
“The Bank of Thailand (BOT) should urgently adjust rates,” the group’s chair Sanan Angubolkul said, adding markets were expecting 25 basis points cut, with more next year.
Sanan said the baht level was uncompetitive for exports, a key driver of growth.
It reached its highest level in 31 months on Monday, trading at 32.125 against the greenback. Year-to-date, the baht has risen 5 per cent, making it the region’s second best-performing currency after Malaysia’s ringgit.
The business group maintained its economic growth forecast at 2.2 to 2.7 per cent this year and said government stimulus measures were supportive.
So far, 140 billion baht (S$5.5 billion) in cash has been transferred to vulnerable groups in the first tranche of the government’s signature handout scheme.
The group also kept its export growth outlook at 1.5 to 2.5 per cent, even with concern over the baht strength.
The push for a rate cut from businesses comes as the finance ministry and BOT are due to meet this week to discuss the inflation rate target, which has not changed since 2020, and the currency’s performance.
The meeting, first reported by Reuters, follows months of government pressure on the BOT to cut rates and align with fiscal policy aimed at stimulating the economy.
Finance Minister Pichai Chunhavajira expects to come to an agreement with the central bank on an inflation target this month.
The Joint Standing Committee on Commerce, Industry and Banking, which includes representatives from those sectors, on Wednesday said it too was seeking a meeting with the central bank to discuss rates, Sanan said.
The BOT in August held key interest rates at a decade-high of 2.5 per cent for a fifth straight meeting. The rate review panel meets again on Oct 16.
On Monday the BOT said it was managing the baht’s volatility and the currency’s rapid appreciation was hitting exporters’ profits and tourism spending, both key economic drivers.
South-east Asia’s second-largest economy grew at a faster pace of 2.3 per cent in the April-to-June quarter on the year. The economy expanded 1.9 per cent last year. REUTERS
