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Thailand: BOT to hike policy rate with minimal damage

The Bank of Thailand (BOT) is expected to raise the policy rate at a gradual pace this year, given the upward trend for global interest rates and consistent Thai economic expansion, according to TMB Analytics.

The Federal Reserve is foreฌcast to hike its benchmark rates by three times this year and if the BOT does not increase the Thai policy rate, the Thai interest rate will be 0.75 percentage point lower than the US rate, the research house said.

Thai SMEs may be somewhat affected from likely rises in the Thai interest rate. 

But the effects should be minimal because its interest expense accounted for 3.4 per cent of total operating expenses, and purchasing power has recovered due to the consistent economic growth. 

Besides, nonperforming loans of SMEs declined to 4.3 per cent in the fourth quarter of last year, reflecting that SMEs had taken a path to recovery.

Source: http://www.nationmultimedia.com/detail/Economy/30339155