InfoQuest (June 17, 2022) - According to Mr. Thanawat Pholwichai, Chief Advisor of the Center for Economic and Business Forecasting of the University of the Thai Chamber of Commerce (UTCC), interest rate hikes are sweeping the globe. Central banks use interest rate policy to counter rising inflation. Thailand's Monetary Policy Committee (MPC) is likely to raise interest rates by 0.25 percent at each of its three regular meetings this year.
An emergency meeting will be called to raise interest rates when the Thai stock and bond markets are affected by the loss of confidence in the market due to severe capital outflows and the slow pace of Thailand in curbing inflation. But at present, there is no need to raise interest rates ahead of schedule.
Thanawat also predicted that each 0.25 percent increase in the policy rate could have a negative 0.1 percent impact on the economy.
As per raising interest rates, the Bank of Thailand should build a psychological defense from two aspects of inflation and exchange rate. First, it should show Thailand's efforts to avoid inflation and its ability to solve problems promptly. Second, it should increase publicity that higher interest rates will help prevent massive capital outflows and keep the baht exchange rate within a reasonable range.
Source: InfoQuest, by Kasamarporn Kittisamphan/Rachada Kongkhunthian, translated by Xinhua Silk Road
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