Bangkok Bank (BBL) and Kasikornbank (KBank) have both slashed their deposit and key lending rates following the Bank of Thailand's policy rate reduction.
In a move seen rarely in recent years, commercial lenders have rushed to pass on Wednesday's 25-basis-point benchmark interest rate cut by the Monetary Policy Committee (MPC).
Siam Commercial Bank announced its rate cuts only hours after the rate-setting committee's decision. It slashed its rates for savings by 12.5 basis points and for time deposits by 10 basis points, while its minimum lending rate (MLR) and minimum retail rate (MRR) were cut by 12.5 basis points, effective yesterday.
KBank yesterday announced it was cutting its rates for savings accounts by 13 basis points to 0.50%, while rates for fixed deposits were cut by 15-25 basis points. The country's fourth-largest bank also trimmed its MLR and minimum overdraft rate (MOR) by 13 basis points to 6.75% and 7.40%, respectively, effective today.
BBL trimmed savings rates by 12.5 basis points and fixed-deposit rates by 10-25 basis points. It also cut its MLR and MOR by 12.5 basis points to 6.75% and 7.25%, respectively, but left its MRR unchanged at 8%. The new rates came into effect yesterday.
The MPC voted 4-3 to slash its benchmark one-day repurchase rate by a quarter percentage point for the first time this year to 2% from 2.25%, saying "downside risks to growth have risen in the wake of the prolonged political situation" and "monetary policy has some scope to ease in order to lend more support to the economy and ensure continuous financial accommodation".
Economists are divided over the MPC's next move after the cut.
Amonthep Chawla, CIMB Thai Bank's vice-president for economic and financial market research, forecast that the benchmark rate will be kept steady for the rest of this year if there is no crisis.
"The rate cuts are aimed at stimulating spending and alleviating the interest burden for households. If the political problem is ended, the economy will rebound rapidly, with a chance to see a rate rise late this year," he said.
The MPC unexpectedly trimmed the rate by 25 basis points at its meeting in late November to 2.25%. However, HSBC and Credit Suisse said the latest rate cut was not big enough to revitalise the economy.
