FTI brews the BOT to help those affected by interest rate hikes
Mr. Kriengkrai Thiennukul The chairman of the Federation of Thai Industries (FTI) revealed that as a result of the Monetary Policy Committee (MPC) meeting on August 10, it was agreed to raise the policy interest rate by 0.25% per year. from 0.50% to 0.75% per year with immediate effect This will cause commercial banks to adjust interest rates on deposits. and interest on loans to be consistent which from the past information during the crisis Most commercial banks will adjust the difference or spread between deposit interest and loan interest to be wider. to cover the bank’s financial risks The policy rate hike by 0.25% is expected to increase costs of commercial banks and have to raise interest rates to 0.75-1%, which will increase financial costs in the industrial sector.
Mr. Kriengkrai said Proportion of credit in the manufacturing sector The loan value reached 2.29 trillion baht, accounting for 12.68 percent of the total loan value. The industry is expected to be affected by the rising interest rate burden. It will be in the industry with high loan amount such as Construction and real estate industry electricity supplier industry renewable energy industry Petrochemical and Chemical Industry etc.
“The impact could include small and medium-sized enterprises (SMEs) borrowing to invest in rehabilitation after COVID-19. The outstanding balance of loans to SMEs totaled 3.49 trillion baht, accounting for 19.35% of the country’s total outstanding loans (18 trillion baht), divided into SMEs in the sector. Producer has outstanding loans of over 683,870 million baht or accounted for 19.59% of all outstanding loans to SMEs. from energy prices raw material costs, including logistics costs,” said Mr. Kriengkrai.
Mr. Kriangkrai said that, in addition, industrial operators must be prepared to deal with rising electricity prices and minimum wages, which will directly affect production costs and the competitiveness of Thai industries. In the past, the Bank of Thailand has been able to supervise monetary policy well and has been carefully considered. taking into account specific factors or elements that differ from the US economy This is because Thai inflation is caused by cost push inflation from rising oil and commodity prices due to the Russian-Ukrainian conflict. The rise in US inflation was caused by Demand Pull inflation. FTI therefore has the following recommendations:
1) Agree with the gradual policy rate hike of the Bank of Thailand (BOT). to maintain economic stability and exchange rate equilibrium The appropriate exchange rate should be 34-35 baht per US dollar. which will be suitable for importing and exporting Thai products
2) Ask the Bank of Thailand to control and supervise the increase in interest rates of commercial banks by keeping the spread between deposit interest and loan interest not too wide. and control the interest rate of commercial banks to be at the appropriate rate. to mitigate the impact of entrepreneurs and the public
3) Ask the government to issue measures to help debtors in the small and medium-sized enterprises (SMEs) and low-income people, such as a measure to slow down the interest rate hike. Measures to support debt restructuring debt moratorium and low-interest loan measures (Soft Loan) to give entrepreneurs time to adjust to the trend of rising interest rates