Thai central bank to keep rates steady

BANGKOK: Thailand's central bank is widely expected to leave its policy interest rate steady for a third straight meeting even as the economy continues to struggle more than a year after a military coup ended months of political unrest.

Twenty of 21 economists polled by Reuters forecast the one-day repurchase rate would be left unchanged at 1.50% when the Bank of Thailand meets on Wednesday due to global market uncertainties, a weak baht and the country's recent stimulus to help the economy.

One economist expected a 25-basis-point cut to 1.25%, which would match the record low set in April 2009, during the global financial crisis.

Kobsidthi Silpachai, head of capital markets research at Kasikornbank, said with the baht's weakness, the central bank has no need to do more for now. 
"The Fed, Malaysia and China are already doing the heavy lifting for us," he said.

At its Aug 5 meeting, the Monetary Policy Committee voted 7-0 to hold the rate, saying the conduct of monetary policy had led to easier monetary conditions, while the direction of the exchange rate movement had stayed conducive to economic recovery.

Bank of Thailand officials have said scope for further easing in monetary policy was limited after two surprise rate cuts in March and April. They are hoping the baht, which has weakened by 8.7% against the dollar so far this year, will boost exports, a key economic driver.

Still, some economists expect a further cut.

"It is a tough call," said Singapore-based economist Santitarn Sathirathai of Credit Suisse, who expects a cut this week. "They may well choose to stay on hold ahead of the Fed move on Friday but I also see risk of a cut given a likely weaker growth outlook and lower inflation."

Annual consumer prices in Thailand declined for an eighth straight month in August, giving policymakers more leeway to ease.

While expecting no policy change this week, ANZ predicts one more cut before the end of the year given the fragile economic outlook, with the central bank letting currency weakness augment easier monetary policy.

South-East Asia's second-largest economy has not gained momentum since the army seized power in May 2014, with exports and domestic demand stubbornly sluggish.

The central bank said last month it would cut its 2015 growth forecast again from 3% when it gives a new estimate on Sept 25. Growth was just 0.9% last year. - Reuters
Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 0
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

Next In Business News

Press Metal to gain from robust aluminium prices
Exciting deals at Sunway Theme Parks Mega Roadshow
CPO futures likely to trade in yo-yo mode next week
Maybe Apple’s weakness isn’t just supply chain woes
Good news for the global economy
BP, Chubu Power to study CCS project at Nagoya
Short Position: Private equity exits, Managing cyber threats, Don’t kick the can down the road
Bonds surge as traders call time on hikes
Central banks continue fight against inflation
Defining market manipulation

Others Also Read