Thursday, February 8, 2024, 6:50 a.m.
The MPC voted 5 to 2.
Maintain policy interest rates
Rate 2.50 % per year
The Prime Minister disagrees.
The MPC voted 5 to 2 to maintain the policy interest rate at 2.50 percent per year, assessing the Thai economy in 2024 as likely to expand at a slower pace. from the export and production sectors This is due to slow global demand and Chinese economic recovery. Settha’s side did not agree. But there is no right to interfere.
On February 7, 2024, Mr. Piti Disayathat, secretary of the Monetary Policy Committee (MPC), announced the results of the MPC meeting that the committee voted 5 to 2 to maintain the policy interest rate at 2.50% per year. By 2 votes, it was agreed that the policy interest rate should be reduced by 0.25% per year.
Mr. Piti said The Thai economy in 2024 is likely to expand at a slower pace. from the export and production sectors This is due to slow global demand and Chinese economic recovery. Including structural factors affecting the expansion of industrial and tourism exports more than estimated. But domestic demand continues to expand and is an important driving force of the economy. Inflation rate is low. It is likely to gradually increase towards the target frame more slowly than expected.
The committee assesses that the economic expansion has slowed down in the past, mainly due to less momentum from the foreign sector. and the impact of structural factors But consumption continues to expand well. Meanwhile, interest rates remain at a level consistent with maintaining economic and financial stability, which is an important foundation for long-term sustainable growth. The majority of committee members therefore agreed that the policy interest rate should be maintained at this meeting.
While 2 directors It is considered that the interest rate should be reduced by 0.25% per year to be in line with the lower economic expansion potential. From structural factors of the Thai economy at the end of 2023 Expanded more slowly than expected due to merchandise exports and production that recovered slowly in line with global trade conditions. and high levels of inventory Changing the behavior of foreign tourists That causes income per person to be less than in the past. and decreased public investment during the delay in the annual budget. Reduced economic momentum at the end of 2023 results in the expansion of the Thai economy for the entire year 2024 being reduced and expected to be in the range of 2.5-3%.
by private consumption and tourism sector It is also an important driving force. Meanwhile, exports and production tend to expand gradually. Partly from global demand and the Thai electronic product cycle that recovered more slowly than expected. looking forward Structural problems, especially the country’s competitiveness, will be more of an obstacle. If there is no economic structural reform general inflation rate It is likely to be lower than estimated.
From supply side factors, both fresh food prices and energy prices Including the expansion of government living cost assistance measures. The current low inflation rate does not indicate weak demand. The prices of products did not decrease broadly but reflected specific factors in certain product groups. And if deducting the results of the government’s cost of living assistance measures Headline inflation remains positive. General inflation in 2024 is likely to remain low near 1% before gradually increasing next year. Meanwhile, core inflation is likely to remain close to the original.
In addition, we still need to monitor conflicts in the Middle East that may affect energy prices. Impact on agricultural product prices from climate change and government measures to help with living expenses The overall financial system is stable. Commercial banks have strong levels of capital and reserves.
for fundraising through the overall bond market Can still operate normally Although some issuers of high-risk debt instruments have not been able to raise funds to replace bonds that have matured (rollover) in full, The Committee places importance on taking care of the credit quality of SMEs and vulnerable households whose incomes are still slowly recovering. By supporting the policy of BoT that encourages financial institutions Continue to carry out debt restructuring measures. Including targeted measures and sustainable debt solutions for vulnerable groups. Especially measures for providing loans in a responsible and fair manner (Responsible Lending).
The overall financial condition is stable. Private sector borrowing costs through commercial banks and the bond market are similar to before. The business sector and households as a whole continue to receive new loans. Meanwhile, the loan outstanding decreased slightly due mainly to debt repayment. Entrepreneurs as a whole You can still pay your debts as usual. Even though income recovery is gradual and raw material costs are high,
However, small businesses in some industries may face tight credit conditions following the caution of financial institutions. As for the exchange rate of the baht against the US dollar since the beginning of 2024, it has depreciated in line with regional currencies. It is important to follow the forecast of monetary policy direction of the US Federal Reserve under the framework of monetary policy that aims to maintain price stability. along with taking care of the economy to grow sustainably and maintain stability of the financial system The committee assesses that the growth of the Thai economy is likely to slow down as a result of foreign factors and structural problems.
while domestic demand There is continued momentum and inflation. There is a trend of gradually increasing towards the target frame. The current interest rate is still in line with the expansion of the economy. It also facilitates the maintenance of long-term economic and financial stability. However, the Committee is of the view that there is still high uncertainty in the period ahead from economic cycle and structural factors. The implementation of monetary policy in the period ahead will be considered to be appropriate to the economic and inflation trends.
Previously, Mr. Settha Thavisin, Prime Minister and Minister of Finance Gave an interview before the Cabinet (Cabinet) meeting on February 6th, stating that it was time to reduce interest rates. After 4 months of negative inflation, there is no risk. Inflation Looking at reducing interest rates Help reduce the burden of expenses. “If interest rates are reduced from 2.50% to 2.25%, there is still a lot of space. If there is a crisis It is still possible to reduce interest rates further. I emphasize that there is still a lot of space. Why don’t we start doing it today?” and stated that Now it will be a problem of deflation. Therefore, the interest rate reduction is timely and it is left to the relevant financial committee to meet.
At Government House, Mr. Settha Thavisin, Prime Minister and Finance Minister, gave an interview in which the MPC resolved to maintain the policy interest rate at 2.50 percent per year to be in line with the potential for economic expansion that is lower from structural factors that must be accepted as his duty We have no right to interfere in anything. Their job is to give opinions to the government on what should be done. Where is the suffering of the people? But the voting results were like that and the government could not interfere.
“Ask if you agree. Probably disagree. The MPC has independence in implementing monetary policy. But we also want to see what he has studied and what Mr. Phumtham Wechayachai, Deputy Prime Minister and Minister of Commerce, has said. We want to see monetary and fiscal policy move together. Because now inflation has been negative for 4 months in a row,” the Prime Minister emphasized.
When asked that at this MPC meeting interest rates will not be reduced. At the next meeting, do you expect interest rates to be reduced? The Prime Minister said that he would have to keep looking at the numbers. He didn’t have a flag. Do I have to reduce or something? Because the numbers come out all the time.
2024-02-07 23:50:00
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