2 replies to this topic

[Dick]

"The Bank of Thailand announced a policy rate cut by 25 basis points to 3.25 percent on Wednesday in an effort to rein the baht. The decision, which was made at a Monetary Policy Committee meeting, came after Deputy Prime Minister and Industry Minister Kosit Panpiemras said on Tuesday that there was "room for interest rates to fall futher."

It is the fifth consecutive rate cut this year in a bid to help business operators suffering as a result of the sharp baht rise.

"The policy rate cut will help halt the baht's appreciation," Suchada Kirakul, an assistant to central bank governor, told reporters. She said the controversial capital controls will stay in place, adding that a package of measures to be proposed to the government to rein the baht would involve capital outflows, not capital controls."

http://www.bangkokpost.com/breaking_news/b...s.php?id=120288

It's interesting that the US fed, UK and European banks have been raising or holding rates steady, for fear of inflation, but that does not seem to have deterred the Bank of Thailand from cutting again.

[Hedda]

It will be interesting to see how much the Thai banks cut their interest rates in the aftermath of this .25% cut. No doubt, they will cut their rates paid on deposits but may leave their lending rates untouched.

It's amazing to see how the press reports here are so quick to criticize the BOT for not cutting rates enough, but then totally ignore the fact that the Thai banks have not been passing on the impact of the full cuts in their lending rates to their customers. The BOT can cut rates until the buffalo comes home but if the banks aren't cutting their lending rates in line with the BOT cuts, the only people who are getting richer are the Banks. . .and we know who owns them.

[Birch]

It will be interesting to see how much the Thai banks cut their interest rates in the aftermath of this .25% cut.

It didn't take long to find out. True to form, the Bangkok Bank cut its interest rate on deposits by the full .25 %, but dropped many of its lending rates by only half that.

"Bangkok Bank announced that minimum loan rates would be cut to 6.875% from 7%, with minimum overdraft rates reduced to 7.125% from 7.25% and minimum retail rates cut to 7.375% from 7.5%, effective immediately.

Fixed deposit rates of three- and six-month terms and over five million baht were cut to 2.25% from 2.5%, with rates for smaller accounts unchanged at 2.25%. . .

Central bank officials on Wednesday noted that bank interest rates remained relatively high. Banks have been slow to cut rates as funding costs have been mostly tied to long-term fixed deposits.

According to Tisco Securities, the real interest rate, defined as the difference between the central bank's policy rate and inflation, was 1.59% in June _ well above the average of -0.1% from 2000 to the present. "

http://www.bangkokpost.com/Business/20Jul2007_biz36.php