Central bank likely to keep interest rates unchanged

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BANGKOK, July 9 –  The Bank of Thailand’s Monetary Policy Committee (MPC) meeting tomorrow is expected to maintain the benchmark interest rate at 2.5 per cent, according to a senior bank executive.

Kasikorn Bank Pcl (KBank) executive vice president Chatchai Payuhanaveechai said he based his view on the belief that the Thai economy could expand further, but the 2.5 per cent key interest rate is appropriate with the current economy and the baht weakening.

It is not necessary for the MPC to lower interest rate to stimulate the economy as interest rates that are too low will encourage more household debt, he said, adding that the public will bring their savings to invest in risk assets and real estate, which might urge faster signs of a financial bubble.

Meanwhile, the bank’s executive vice president said Thailand’s overall situation of household credit card debts holds a low proportion, accounting for about Bt260 billion, while the value of overall household debts reach around Bt8 trillion.

He noted that most credit card debtors are middle-income earners of at least Bt15,000 per month, which is not a worrisome group in terms of paying their debts.

Credit card use in the first half of this year expanded 12-14 per cent, which is considered a low expansion owing to concerns on household debt, low consumption in May-June as a result of the new school term, installment payments under the first-car buyer scheme which took the money out of consumption system at Bt6 billion/month or Bt72 billion/year.