Thai Business Lobby Joins Rate Cut Call as It Trims GDP Forecast

(Bloomberg) -- Thailand’s biggest business lobby urged the central bank to cut interest rate and work with the government on ways to revive business and consumption activity, after slashing its own estimate for economic growth.

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Lower interest rate will be beneficial for businesses as it brings down the overall costs, Kriengkrai Thiennukul, head of the Joint Standing Committee on Commerce, Industry and Banking, told reporters in Bangkok on Wednesday. The JSCCIB is the umbrella group for lobby outfits such as the Thai Chamber of Commerce, the Federation of Thai Industries and the Thai Bankers Association.

Kriengkrai didn’t, however, specify the quantum of rate cut the group wants, saying “we just want it to be as much as possible.”

The Bank of Thailand has kept borrowing costs at a decade high 2.5% since September, ignoring repeated calls by Prime Minister Srettha Thavisin and his aides to cut the policy rate. The BOT said last month that holding the rate steady has given it “policy optionality” to deal with currency volatility, geopolitical risks and uncertainties stemming from the timing of the Federal Reserve’s pivot to easing.

The business group’s call for cheaper borrowing cost comes a day after newly-appointed Finance Minister Pichai Chunhavajira urged BOT to support government policies to bolster Southeast Asia’s second-largest economy. Most banks cut the minimum retail lending rate by 25 basis points in response to Srettha’s appeal to them to help small businesses and individual borrowers hit by high interest rates.

Kriengkrai, who also heads the Federation of Thai Industries, said the government and the central bank should talk to each other and work together as the “economy is very fragile and facing multiple risks.”

The group lowered its domestic growth forecast to a range of 2.2% to 2.7% this year from 2.8% to 3.3% previously, citing a worse-than-expected exports performance amid sluggish global trade. It now sees inflation in a range of 0.5% to 1%, lower than the 0.7%-1.2% band it predicted earlier.

The joint committee is also opposed to a government plan to raise the daily minimum wage for all workers to 400 baht ($10.8) from October, saying such a steep increase will hurt the economy and planned investments.

Srettha’s government will convene a meeting of the tripartite committee overseeing minimum wages next week to discuss the increase with the premier saying on Tuesday that his administration was committed to raising the pay for workers. Srettha’s Pheu Thai party has pledged to boost minimum wages to 600 baht a day within four years.

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