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Banking Sector Expected to Postpone Raising Interest Rates

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The banking sector is expected to postpone raising interest rates to align with the Bank of Thailand’s gradual policy rate hike.

According to the Joint Standing Committee on Commerce, Industry, and Banking (JSCCIB), banks may not react immediately to increases in interest rates to support borrowers amid the gradual economic recovery in the second half of 2022, given the policy rate hike trend in the second half of this year.

Payong Srivanich, chairman of the Thai Bankers’ Association (TBA), stated that the central bank have signaled a gradual policy rather than a hawkish rate hike during their discussion. He believes banks will continue monitoring the economic situation and BoT’s policy before adjusting its rate increase. Still, he could not say how long the delay would be for banks to raise interest rates following the central bank’s rate hike.

The JSCCIB maintained its 2022 GDP growth forecast between 2.75% and 3.5%. It revised its forecast for inflation from 5-7% to 5.5-7% and increased its forecast for export growth from 5-7% to 6-8%. The JSCCIB added that tourism would be a key driver of Thailand’s economic recovery, with foreign arrivals expected to increase to 7-8 million this year.

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