BANGKOK: Thailand's central bank is expected to leave its policy interest rate steady again on Wednesday even though the economy continues to stumble more than a year after the military took power in a bid to end political unrest.
Twenty of 23 economists in a Reuters poll predict the monetary policy committee (MPC) will leave the one-day repurchase rate at 1.50% for a second straight meeting following surprise cuts in March and April.
The other three expect a 25 basis point cut to 1.25%, which would match the record low set in April 2009, during the global financial crisis.
At its last meeting in June, the MPC voted 7-0 to hold the rate. It is hoping a weaker baht will lift exports, a key economic engine that is expected to contract for a third straight year in 2015.
The baht has dropped 6.3% against the dollar this year. Deputy Prime Minister Pridiyathorn Devakula told Reuters last month that a weaker baht would help growth more than a rate cut.
Finance Minister Sommai Phasee also said last week more rate cuts would not help the economy amid weak investment and global demand.
Still, some economists favour another 25 basis point rate cut on top of the two earlier this year.
Piyasak Manasorn, economist of Kiatnakin Bank in Bangkok, expects a cut on Wednesday as "the economy is not recovering", with more risks ahead.
Pragrom Pathomboorn, economist of KGI Securities in Bangkok, said the overall economy is "grim", given poor data. Exports tumbled in June at the steepest annual rate since late 2011 while factory output fell the most in 15 months.
Kobsidthi Silpachai, Kasikornbank's head of capital markets research, said this year's two cuts have done little to bolster domestic confidence and demand.
"To hope that a third would do the trick might be leaning too much on wishful thinking," he said.
Tim Leelahaphan, economist of Maybank Kim Eng, said rate-cut expectations were scaled back due to baht's sharp depreciation.
Sluggish exports and domestic demand amid high household debt and shaky consumer confidence have dragged on the junta's efforts to revive South-East Asia's second-largest economy.
The economy grew only 0.9% last year, the weakest pace since 2011. The central bank in June cut its growth forecast for this year to 3% from 3.8%.
Consumer prices in Thailand declined for a seventh straight month in July from a year earlier. - Reuters
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