Business leaders dissatisfied with decision not to lower interest rate
The business sector expressed disappointment over the Bank of Thailand’s decision on Wednesday to hold the key interest rate to 2.50%, as it believes the rate should be lowered to attract investors given that the country’s economy has yet to fully recover.
The BOT’s Monetary Policy Committee (MPC) on Wednesday voted 5:2 in favour of holding the rate, which is almost at a decade high. The two committee members who voted against the motion proposed a 25 basis point decrease in the policy rate.
The central bank said the MPC believed that while headline inflation was projected to be lower than forecast, it was not a sign of low demand, as falling prices were concentrated in sectors like food and energy. Headline inflation excluding subsidies remained positive.
Following the BOT’s announcement, Suphan Mongkolsuthee, former president of the Federation of Thai Industries and CEO of Synnex Thailand, said he disagreed with the decision to hold the interest rate, adding that the economic growth suffered a slowdown every time the policy rate is adjusted up.
“High interest rates affect both investors and grassroots groups, who are suffering from climbing household debts,” he said. “The BOT should decrease the policy rate to fix inflation that has been dropping for four months.”
Suphan also pointed out that the central bank should admit that the economic growth at the end of fiscal 2023 did not improve as forecast, despite the government’s Easy E-Receipt campaign, which offers up to 50,000-baht tax rebates for spenders at participating businesses during January and February.
Suphan said the BOT should gradually reduce the policy rate until it is lower than 2% by the end of this year, in line with the inflation rate.
Jareeporn Jarukornsakul, chairman and group CEO of WHA Corporation, said that she believed the BOT would lower the interest rate by mid-2024 or within the second half of the year, depending on several factors, including the policy of the US Federal Reserve and GDP expansion.
“To play into this trend, WHA plans to issue about 10 billion-baht debentures by the end of this year, or early next year, in time for the decreased interest rate,” she said.
Jareeporn added that WHA aimed to cut down the maturity date of its debentures from 7 years to 3-5 years, following the success of its 850-million-baht debentures that were sold out in January, with reservations almost three times higher than units offered.
