Experts agree with Bank of Thailand interest rate hike

BANGKOK, July 18 (TNA) - Economic experts Friday backed a recent increase in the policy interest rate by the Bank of Thailand (BoT), saying that the local interest rate had been kept at a low level for a long time and that the hike could curtail rising inflation.
The BoT Monetary Policy Committee (MPC) on Wednesday increased its
interest rate by 25 basis points to 3.50 per cent annually with the
immediate effect being to stave off rising inflation in the country.
Dr. Somjai Phagapasvivat, a lecturer at Thammasat University's Faculty of Economics, said the rate increase posed both advantages and disadvantages.
On the negative side, Dr. Somjai said the increase could affect major borrowers who must pay higher rates for home pourchases and the operating costs of small- and medium-sized enterprises (SMEs) may also rise.
He said depositors would see their interest increases as financial
institutions raise savings interest rates, domestic inflation, which is now increasing could slow down, said Mr. Somjai.
Another academic, Somchai Chitsuchon, research director at Thailand
Development Research Institute (TDRI), said he agreed with the central
bank to raise policy interest rate aimed at controlling the inflation.
However, the research director said local interest rates are not projected to increase much in a foreseeable future because global oil price has started to fall.
Some major bank borrowers would be affected, the TDRI expert added.