Thailand: BoT seen to hold key interest rate at record low

• THAILAND’S central bank is widely expected to leave its key interest rate at a record low on Wednesday as tougher coronavirus restrictions have been eased to support a flagging economy, a Reuters poll showed on 27 Sep 21.
• The South-East Asian country’s worst coronavirus outbreak led to restrictions in Jul 21 and Aug 21 that hit economic activity, but the curbs have since been eased and Thailand will soon reopen to more vaccinated visitors.
• The government also recently lifted the public debt ceiling for more fiscal flexibility to fight the outbreak, while the Bank of Thailand (BOT) governor said the central bank was ready to introduce measures as needed.
• The BOT will give a new forecast on Wednesday. Governor Sethaput Suthiwartnarueput said growth might not reach 1% in 2021. In Aug 21, Mr Sethaput said interest rates were a blunt tool, while Somchai Jitsuchon, a non-central banker on the MPC, said that lower rates would not help much.
• The BoT also said it planned to introduce debt consolidation measures to help reduce interest rates on consumer loans for retail debtors.
• The move is viewed as more useful than cutting the rate ceiling of those loans, at a time of high credit risk, as it would push debtors with bad credit to borrow outside the financial system, said Oramone Chantapant, deputy director at the Bank of Thailand (BOT).
• “What will help debtors a lot is debt consolidation, which will be introduced in the middle of next month and we will also increase incentives,” she told a briefing.
• However, cutting the rate ceiling remains a policy option, she added.
• In June, the government asked the BOT to review interest rates for personal loans and credit cards to ease people’s interest burden.
• The BOT intends to focus on financial support measures to assist debtors, given the stance of the central bank governor, who had said that interest rates were a blunt tool.

External Link : https://www.businesstimes.com.sg/government-economy/thai-central-bank-seen-to-hold-key-interest-rate-at-record-low

External Link : https://www.reuters.com/world/asia-pacific/thai-cbank-introduce-more-debt-measures-october-2021-09-28/