Rate cut not a cure-all monetary tool, said BOT boss
Though the Bank of Thailand still has sufficient monetary tools in its armory to support the economy, it should be known that no single tool could cure all the problems, said central bank governor Veerathai Santiprabhob on Thursday (February 6).
He made the remark at a seminar on economic issues, hosted by Phatra Securities.
The novel coronavirus outbreak has affected various industries to different extent and the policy rate cut alone might not be enough to offset the damages.
He warned that use of the interest rate policy might bring unwanted repercussion, saying that diverse fiscal and monetary tools are needed to tackle the problems.
The central bank' Monetary Policy Committee on Wednesday voted unanimously to trim the policy rate by 0.25 percentage point from 1.25 per cent to the historic low of 1 per cent, effective immediately.
The reduction was in line with MPC's estimate that Thai economy growth would be lower than its previous forecast, due mainly to the new coronavirus outbreak, delay of the 2020 fiscal budget disbursement and drought.
The rate cut has prompted many banks to follow suit, trimming their lending interest rates for corporate customers.
He added that the MPC move reflected the need for swift action in support of the declining economy and ease financial burden of businesses.
After the rate cut on Wednesday, he said, the central bank called a meeting with executives of many banks urging them to provide more financial assistance to customers affected by the economic slowdown.
