On April 1, 2019, the Bank of Thailand introduced a stricter loan-to-value ratio limit of 70%-95% that is dependent on the property price, number of contracts, and type of collateral.
BANGKOK: Thailand's central bank on Wednesday held its benchmark interest rate, as widely expected, and raised its forecasts for growth and exports this year, saying Southeast Asia's second-largest economy continues to gain traction.
Thailand has kept policy settings unchanged for more than three years. A current account surplus and low inflation mean that unlike some other emerging market central banks - such as Indonesia and India, which have external deficits - Thailand is under no immediate pressure to follow the U.S. Federal Reserve in shifting away from low interest rates.
All 21 analysts in a Reuters poll predicted the Bank of Thailand's Monetary Policy Committee (MPC) would leave the one-day repurchase rate key rate at 1.50 percent.
The vote to hold was 5-1. One member voted for a quarter-point increase and another was absent.
The accommodative monetary policy stance "remained conducive" to economic growth and should support the rise of headline inflation "toward target in a sustainable manner," the MPC said.
The member who voted to hike said economic expansion was sufficiently robust and that prolonged accommodation might make households and businesses underestimate potential changes in financial conditions.
The central bank upgraded its 2018 economic growth forecast to 4.4 percent from 4.1 percent seen three months ago. Faster growth will be driven by stronger momentum from both domestic and external demand, the MPC said.
The BOT now expects exports - a key growth driver - to rise 9.0 percent this year from 7.0 percent projected earlier. But the BOT cited external risks, including U.S. foreign trade policies and retaliatory measures from trading partners of the United States.
The BOT raised its 2019 growth forecast to 4.2 percent from 4.1 percent and sees exports increasing 5.0 percent rather than 3.6 percent.
PLETHORA OF UNCERTAINTIES
"The new forecasts suggest the committee is in no hurry to tighten monetary policy," said Kobsidthi Silpachai, head of capital markets research at Kasikornbank.
"It seems the committee is cognizant of the plethora of uncertainties, which seems to be holding back their upgrades in growth and inflation."
The economy grew 3.9 percent in 2017, its fastest in five years, with exports up about 10 percent, though it is not yet firing on all cylinders.
The central bank raised its headline inflation forecast for 2018 to 1.1 percent from 1.0 percent, compared with its target range of 1-4 percent. It maintained its 2019 inflation forecast at 1.2 percent.
The MPC would mainly focus on domestic factors in deciding monetary policy, assistant governor Jaturong Jantarangs said briefing.
Capital Economics said "a large current account surplus, low FX debt and healthy foreign reserves mean Thailand is well-placed to cope with any shifts in global capital flows."
The last time the BOT increased its policy interest rate was August 2011, by a quarter-point to 3.50 percent.
The central bank said it would continue to closely monitor exchange rates as the baht would likely remain volatile.
The baht, hovering around its lowest since December, has weakened about 0.4 percent against the dollar this year. - Reuters
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