Next month, the National Bank will raise interest rates.

the wind changes direction

26 Jul 2022 6:38 a.m.

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During this time, Dr. Setthaput Suthiwatanaruput

The Governor of the Bank of Thailand (BOT) issued a signal quite often.

The central bank is about to raise its policy interest rate (at the MPC meeting on August 10) to curb current high inflation.

for people to prepare in advance

But the interest rate increase of the Thai National Bank

will rise gradually

Not as severe as the US, although June inflation rose to 7.66%, the highest in 13 years, but it is still lower than the US and UK, where June inflation rose to 9.1% and 9.4%, the highest in 40 years. The UK expects inflation to rise to 11% by the end of this year.

The Bank of Thailand raised interest rates more slowly than other countries because the economic recovery of Thailand is still slower than other countries in the region.

Still reliant on tourism as high as 12% of GDP, it has to fully combine fiscal and monetary policy.

to help the Thai economy gradually recover.

And the financial institution system is still working normally.

Dr. Setthaput revealed during a meeting with the media at the Bank of Thailand that

The main goal of the Bank of Thailand is to cause the Thai economy to recover continuously without interruption.

What to do is

Make inflation low and not fluctuate because high inflation will affect the well-being of the people.

especially fragile and low-income groups

Low-income earners account for more than 55% of their spending on food and energy, while high-income earners spend only 42% in this category.

will make people think that inflation will continue to be high

This makes it difficult to adjust the decrease because entrepreneurs will increase the price of the product.

and the employee may request a continuous wage increase

Bank of Thailand

Monetary policy will keep inflation from rising further in the future.

But we haven't raised interest rates yet.

The real cost of borrowing will be reduced even more.

and more accommodative monetary policy

(A clear example is the US, where US Treasury Secretary Janet Yellen

came out to confess that

The US Federal Reserve made a mistake in forecasting.

print extra money

economic stimulus

make GDP soar

But inflation rose faster than ever to a 40-year high, resulting in the US GDP being negative for two consecutive quarters until it entered a recession.

as seen at present)

Bank of Thailand governor says interest rate hikes will not stumble the economy

This should be done early when you see the signal.

because passing on monetary policy takes time

If it's too slow, it can cause engine inflation.

and then have to speed up interest rates later

(like the United States), which will be more detrimental to the economy and people.

The Bank of Thailand has assessed that it is worthwhile.

Depositors will receive higher returns.

While some types of debtors receive floating interest.

despite having to pay higher interest

But it has less impact on household expenses than inflation.

According to the Bank of Thailand's assessment, a 1% increase in loan interest rates will increase household interest burden by 0.5%, compared to a 3.6% increase in inflation expenses. Interest up to 7 times

June

Thai inflation rises to 7.66%, expenses increase 14 times

Old debtors that are available in the system, Dr. Sethaput revealed that about 60% of retail loans already have fixed interest (Fixed), such as hire purchase loans, credit cards, personal loans. Most home loans are floating and pre-set installments.

This group will not be affected.

Almost all business receivables

It is floating interest. Only “new debtors” will be affected by higher interest rates.

I finally listened.

This policy rate hike has little impact.

Compared to "inflation", which rose to 7.66%.

"The wind changes direction"

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