File photo: Pichai Chunhavajira, Finance Minister
The Finance Ministry has welcomed the Bank of Thailand’s Monetary Policy Committee’s (MPC) decision to cut the key interest rate by 25 basis points, to 2.25%, and expects a further 25 basis point cut at its next meeting, said Finance Minister Pichai Chunhavajira today.
He said that the rate cut will ease the cost of borrowing and enhance confidence in bond yields, adding, however, that liquidity should also be improved so businesses will have greater access to new borrowing for investment.
The finance minister also said that he will meet with commercial banks in an attempt to persuade them to loosen restrictions on borrowing by businesses.
Pichai said that the MPC’s decision to cut the key rate, for the first time in four years, is in line with the government’s expectation, adding that the central bank should, nonetheless, review its process for calculating the rate by taking into consideration interest rate trends in other economies, such as in Europe and the United States.
At the next MPC meeting, the finance minister said he expects another 25 basis point cut, when taking both internal and external factors into account.
Pichai also said that he expects inflation to increase to 2-3% next year.
