Why Thailand may reveal macro-prudential measures soon

Targeted at slowing consumer credit growth.

According to DBS, credit growth trajectory for businesses and individuals diverged in early 2012 and have widened over the past few quarters. In levelterms, business loans rose by 13% since early 2012 while loans to individuals rose by 26%.

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The pickup in individual loans have helped to push up GDP growth overthe past few quarters but the central bank has on occasion sounded out concerns about the pace of consumer credit accumulation.

With momentum in the economy having stalled and public infrastructure spending plans likely delayed (with more impact on GDP growth in 2014 as opposed to 2H13), supporting domestic demand growth through a low policy rate is a probable response from the central bank. However, this risks a further buildup of consumer credit in the coming months.

In order to keep rates low to support the economy while keeping an eye on consumer loans, we think that the central bank may introduce macro prudential measures targeted at slowing consumer credit growth.