FTI urges steep cut in policy rate

The MPC will convene tomorrow. The policy rate is now 3.25 per cent.

Sommat Khunset, secretary-general of the FTI, said that high policy rate would pressure economic recovery, as this would add into manufacturing cost amid higher labour wage, raw materials costs and diesel prices. Without government assistance, Thai businesses particularly small and medium-sized ones would face great difficulties.
"The private sector is confident that the low policy rate would be more effective in boosting the economy than other government measures in the pipeline. This would reduce the operating cost of over 3 million manufacturers and debt burden of the majority. This would quickly boost consumption," he said.
The FTI is of the view that the agricultural sector would be a key economic engine this year, as the Thai economy is on the course of rehabilitation amid global uncertainties. It expected the US and European economies to remain in doldrums for two more years. As such, the policy rate must be slashed hugely, as even a cut by 25-50 basis points would not help lift up the sentiment.