Business group urges central bank for rate cut

Thailand’s leading business group on Wednesday urged the central bank to cut interest rates, backing the government’s repeated calls for monetary easing, and flagged concern about the impact on exports from a rapidly appreciating baht.
“The Bank of Thailand (BoT) should urgently adjust rates,” Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) chairman Sanan Angubolkul said, adding markets were expecting 25 basis points cut, with more next year.
Mr Sanan said the baht level was uncompetitive for exports, a key driver of growth.
“The strong Thai baht is causing concern in all sectors. The government can take several actions, such as boosting exports to stimulate the economy and make the most of the current strong baht,
It reached its highest level in 31 months on Monday, trading at 32.125 against the greenback. Year-to-date, the baht has risen 5.0%, making it the region’s second best-performing currency after Malaysia’s ringgit.
The business group maintained its economic growth forecast at 2.2% to 2.7% this year and said government stimulus measures were supportive.
So far, 140 billion baht (US$4.29 billion) in cash has been transferred to vulnerable groups in the first tranche of the government’s signature handout scheme.
The group also kept its export growth outlook at 1.5% to 2.5%, even with concern over the baht strength.
The push for a rate cut from businesses comes as the Ministry of Finance and the BoT are due to meet this week to discuss the inflation rate target, which has not changed since 2020, and the currency’s performance.
The meeting, first reported by Reuters, follows months of government pressure on the BoT to cut rates and align with fiscal policy aimed at stimulating the economy.
Finance Minister Pichai Chunhavajira expects to come to an agreement with the central bank on an inflation target this month. 
The JSCCIB, which includes representatives from those sectors, on Wednesday said it too was seeking a meeting with the central bank to discuss rates, Mr Sanan, also chairman of the Thai Chamber of Commerce, said.
The BoT in August held key interest rates at a decade-high of 2.50% for a fifth straight meeting. The rate review panel meets again on Oct 16.
On Monday, the BoT said it was managing the baht’s volatility and the currency’s rapid appreciation was hitting exporters’ profits and tourism spending, both key economic drivers.
On Tuesday, Deputy Finance Minister Paopoom Rojanasakul said that the BoT is not doing enough to manage fluctuations in the baht, adding that the root cause was interest rates that are not aligned with the economy.
Southeast Asia’s second-largest economy grew at a faster pace of 2.3% in the April-June quarter on the year. The economy expanded 1.9% last year.