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Finace ministry is keen to see rate cuts this year

Finace ministry is keen to see rate cuts this year

Thailand’s finance ministry is advocating for a reduction in interest rates this year to better align with economic fundamentals and plans to consult with the central bank regarding monetary policy easing, according to Deputy Finance Minister Paopoom Rojanasakul.

The ministry aims to address challenges within the automotive sector, which is negatively impacting manufacturing, by discussing access to car loans with the Bank of Thailand. Rojanasakul emphasized the need for a policy interest rate cut to support the struggling manufacturing sector, which continues to face difficulties.

Recent data from the Federation of Thai Industries revealed a 17.37% decline in car production in December compared to the previous year, marking the 17th consecutive month of decrease. Additionally, domestic auto sales in 2024 plummeted by 26.2% annually, reaching their lowest point in 15 years, with a staggering 70% rejection rate for auto loans reported.

In December, the central bank maintained its main interest rate at 2.25% following an unexpected cut in October, with the next policy review scheduled for February 26. Bank of Thailand Governor Sethaput Suthiwartnarueput indicated that while the current rate is deemed appropriate, adjustments may be considered if circumstances change.

Rojanasakul also highlighted the importance of stabilizing the baht to prevent excessive fluctuations that could adversely affect businesses. The baht experienced a decline of up to 1.07% against the dollar on Monday, influenced by concerns surrounding US President Donald Trump’s tariffs on imports from major trading partners, which raised fears of a potential trade war and its implications for the region.

Despite recent stock market volatility, Rojanasakul urged investors to maintain a long-term perspective, asserting that Thailand still holds potential and that economic conditions will improve. The government plans to implement additional stimulus measures to sustain current economic momentum and facilitate further growth. Moreover, it is evaluating how to mitigate the impacts of Trump’s economic policies, which may present opportunities for Thailand to boost its exports.

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