Policy rate hike won’t adversely impact financial costs, says KTB

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The Monetary Policy Committee’s latest move to raise the benchmark interest rate by 25 basis points is unlikely to have an adverse impact on the private sector’s financial costs, according to a top banker.

Krung Thai Bank president Apisak Tantivorawong said the MPC’s decision to increase the policy interest rate was in line with the market’s expectations.

However, he believed the interest rate hike would not adversely affect the financial costs to entrepreneurs because lending rates continued to stay at only 6-7 percent, compared with 10 percent previously.

Apisak said entrepreneurs are now more worried about surging oil prices than the interest rate hike, because fuel prices have surged unexpectedly.

Under the circumstances, if entrepreneurs did not raise product prices, they would then be impacted.

He said the actual deposit rate, when compared with the current inflation rate at 3 percent, remains in the negative by 2 percent.

Because of this, it is expected the Bank of Thailand would increase the policy interest rate further by 50-75 basis points and the deposit rate would continue increasing accordingly.

“From now, salaried workers will be affected if they purchase products on installments,” he said. (MCOT)