Danucha Pichayanan, Secretary-General of the National Economic and Social Development Council, said the US Federal Reserve's 0.25% interest rate increase is not a positive development, as it could raise risks in global financial markets. For Thailand, the Bank of Thailand needs to consider policy approaches to cope with the fallout, especially from the gap in interest rate levels between Thailand and other countries, and it must be monitored for how it affects capital flows and the country's ability to attract investment. Danucha said the key is that Thailand should focus on investment and long-term planning to prepare for volatility that may arise in the future. At the same time, it must prepare to handle domestic risk factors, including floods and drought, so as not to further weigh on the economy during a period of external volatility. As for rising energy prices that could affect transport costs, Thailand already has fund mechanisms and agencies with tools to cope. However, he acknowledged that the government may not be able to make cheap fuel available to everyone, since part of energy prices must follow market mechanisms, and the impact may fall especially on groups with day-to-day incomes. Therefore, the government, businesses, and the public must all prepare, and the government is pushing for an energy transition.
The Fed's 0.25% rate hike raises the effective federal funds rate.
Fed rate hike and heightened global financial-market risk tend to push US 10Y yields higher.
