Friday, November 15, 2019

Worried BOT says it has more ammunition to rescue economy

Oct 11. 2019
Titanun Mallikamas (second to right)
Titanun Mallikamas (second to right)
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By The Nation

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The Bank of Thailand (BOT), the central bank, foresees continued economic slowing and declining interest rates, but insists it’s ready to take action to support the economy.

The bank’s monetary policy committee (MPC) is confident that its reduction in the interest policy rate in August will support economic expansion and help return headline inflation to its targeted framework, the assistant governor of the Monetary Policy Group said after a meeting on Thursday between BOT executives and analysts representing financial markets.

“The MPC will closely monitor risk factors, especially the effects of escalating trade protectionism, and is ready to use policy tools if needed,” Titanun Mallikamas said.

It will also closely follow via several channels exchange rates and capital flow and their impact on the baht, he said.

“The MPC will introduce additional measures in suitable circumstances, including some on which the central bank could take action right away, such as relaxing the rules on capital outflow and encouraging Thais to invest overseas,” said Titanun. 

He said the BOT needs to collaborate with other agencies, like the Board of Investment, to promote investment in the country and thus reduce the current-account surplus, which remains high.

To offset the slowing economy and low interest rates, the bank must improve efforts to regulate financial institutions via micro-prudential measures and maintain financial stability via macro-prudential measures, Titanun said.

It should also collaborate with other agencies to tackle high household debt and business debt, which demand separate strategies since they dealing with different groups of clients, he said.

He noted that some people are financially sound, some with high debt and some who lack financial discipline. The central bank and other agencies have to jointly promote financial discipline, debt restructuring, household savings and responsible lending by financial institutions, he said.

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