Thai interest rate direction to be decided early next month

EVEN though the US Federal Reserve hiked interest rates yesterday, Thai state banks are willing to maintain low rates here for as long as possible but they have to wait for the outcome of the Monetary Policy Committee on July 5, Thai News Agency said today (June 15).

The Federal Reserve raised short-term interest rates by a quarter point yesterday with this being   the Fed’s third rate hike since December. It’s a sign that the US central bank believes the US economy is on solid ground.

Chatchai Sirilai, Government Housing Bank’s managing director, said the Monetary Policy Committee would be considering whether interest rates here should be increased in accordance with the direction of global markets.

After that state banks, including Government Housing Bank ,would hold a meeting on this issue but Mr Chatchai stressed that state banks are willing to hold low interest rates for as long as possible.

According to CNN Money, the Fed also upgraded its forecast for US economic growth and unemployment this year.

Rising interest rates eventually affect millions of Americans from home buyers to credit card holders to savers. However, interest rates for mortgages are not expected to rise immediately.

The Fed’s key interest rate will now hover in a range between 1% and 1.25%. Overall, rates are still very low compared to prior decades. The Fed also said it’s planning to start gradually selling off the assets that it had bought during and after the financial crisis to boost the economy.

Wall Street investors shouldn’t be surprised by the rate hike: They estimated there was a 96% chance that the Fed would raise rates after its two-day meeting.

The central bank’s decision comes after lots of signs that the US  economy is in good shape. The unemployment rate fell to 4.3% in May, its lowest level since 2001. The economy has added jobs for 80 consecutive months.

Fed leaders see the unemployment rate remaining at about 4.3% this year and falling to 4.2% in 2018.

Fed officials also cut their forecast for inflation, one of the last indicators to really pick up momentum in recent years. They lowered their projection to 1.6% for this year from an estimate of 1.9% in March.

“Today’s rate increase by the Fed reflects the continued strength and progress of the US economy,” said Tony Bedikian, head of global markets at Citizens Bank.

Overall, the US has grown at a slow and steady pace since 2009, making it one of the longest periods of growth in American history.


Top: Fed chair Janet Yellen. Photo: CNN Money



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