Mr Apisak says state banks will act as an instrument in improving the economy.
Finance Minister Apisak Tantivorawong has instructed state-run banks to keep their interest rates unchanged throughout this year to help economic growth be more broad-based.
State-owned banks are to act as a policy tool in helping the economic recovery spill over across the sectors, he said.
Income is normally distributed to the poor but the government has stepped in to catalyse the process, said Mr Apisak.
Leaving interest rates unchanged will help income distribution be dispersed to all economic levels, he said.
Mr Apisak also said the Monetary Policy Committee`s six-to-one vote last week to stand pat on the policy rate is not an uncommon split as people on committees often have different theories.
The committee surprised some with a dissenting vote to keep the one-day repurchase rate at 1.5%, the first time in nearly three years the vote was split, at its policy rate call last week.
However, the majority said accommodative monetary policy is still necessary amid the uneven economic rebound.
Chatchai Payuhanaveechai, president and chief executive of the Government Savings Bank (GSB), said the bank will look to maintain lending rates until year-end at least, to comply with the government`s policy to help people, particularly those in the low-income bracket.
With excessive liquidity of 3-4 trillion baht amid new lending growth at the same pace as the country`s economy, liquidity will be ample for handling capital outflows, which could happen if the US Federal Reserve`s rate hike continues, he said.
"If the Fed raises the interest rate significantly, capital will flow out and the baht will be weakened, while domestic interest rates must be increased. I think local rates will be kept unchanged for the first half and outlook depends on the situation in the second half," he said.
"GSB will try to maintain the rates until the end of the year. If it is necessary to raise them, the bank will jack up both deposits and lending rates."
In the meantime, GH Bank president Chatchai Sirilai said the bank will keep rates unchanged within the first half as its 80-billion-baht liquidity is still sufficient.
He forecast the Bank of Thailand`s policy rate will increase once this year by 25 basis points.
In case the state-backed mortgage lender needs to raise its rates, the bank will nudge up the rates by half of the policy rate increase to help people with financial burdens, Mr Chatchai said.
GH Bank`s policy is to not raise rates more than 2% to prevent borrowers from shouldering excessive burdens from the rate spike.
By Bangkok Post(Published: 03/04/2018) https://www.bangkokpost.com/business/finance/1439686/state-banks-told-to-hold-interest-rates-steady
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