The Kasikorn Research Center reported that about a week after the Monetary Policy Committee (MPC) decided to cut the policy interest rate on October 16th, several commercial banks announced reductions in loan interest rates.
The cuts, up to 0.25%, will take effect early next month. According to the Kasikorn Research Center, this gradual reduction in loan rates is part of an effort to pass on lower financial costs, in line with the policy rate, to the credit market.
It is estimated that by the end of 2024, approximately 40.9% of retail and business loans will benefit from these reductions, covering a significant portion of total credit in the Thai banking system.
These single-sided interest rate cuts are expected to reduce the interest burden for individual and business borrowers by nearly 1.3 billion baht during November and December. However, the report notes that this reduction may not lower monthly installments but will instead help borrowers pay off their debts more quickly.
For 2024 as a whole, the Kasikorn Research Center forecasts that credit growth in the Thai banking system may not exceed 1.5%. While lower financial costs due to the policy rate cut will influence credit usage, other factors will also be considered. Both individual and business borrowers are expected to evaluate broader economic conditions, including Thailand’s economic outlook, investment plans, consumption trends, and their ability to service debt, before taking out additional loans.
Source: NNT
