Thai central bank says holding key rate steady creates ‘policy optionality’
THAILAND’S current policy interest rate settings were robust and can handle future risks to the economy, the central bank said on Wednesday, amid continued pressure from the government to lower borrowing costs and help jumpstart sluggish growth.
Cutting rates could help lower debt in the short run but could also induce risks in the longer term, the central bank said, adding that by holding rates steady at 2.5 per cent it created “policy optionality”.
Thailand’s economy was still challenged by structural pressures while inflation remained low due to government measures and supply side factors, the Bank of Thailand (BOT) said.
After the fiscal budget was passed, government expenditure will help support the economy, BOT Senior director Pranee Sutthasri said.
Overall economic conditions were stable with loans expanding, but small businesses and households faced tighter credit conditions.
The BOT left its key interest rate unchanged for a third straight meeting on April 10.
A NEWSLETTER FOR YOU
Asean Business
Business insights centering on South-east Asia's fast-growing economies.
Prime Minister Srettha Thavisin has repeatedly urged the BOT to deliver a rate cut, saying the current level is hurting businesses and investor sentiment and that the economy is in “crisis”.
The BOT’s governor has openly disagreed with Srettha’s depiction of the economy as being in crisis, saying it was in need of structural reforms. REUTERS
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Asean
Top US Treasury official to travel to Singapore, Malaysia to discuss sanctions
Microsoft bets big on South-east Asia, pledges billions in AI and cloud investments
Magnitude 6.0 quake strikes Philippines, aftershocks and damage expected
Indonesia central bank says SRBI auction will be held twice a week to attract more inflow
Thai police raid illegal bitcoin mining operation
Thailand’s April inflation rises slightly, first time in 7 months