Bank of Thailand seen holding key rate at record low

  • Banking
  • Tuesday, 04 Aug 2020

Bank of Thailand

BANGKOK: Thailand’s central bank is widely expected to leave its key interest rate unchanged at a record low after three cuts this year to help cushion the economic impact of the coronavirus pandemic, a Reuters poll showed.

In the poll, 16 of 18 economists predicted the Bank of Thailand’s (BoT) Monetary Policy Committee (MPC) would hold its one-day repurchase rate at 0.50% for a second straight meeting.

The other two economists saw a 25 basis-point cut to a fresh record low of 0.25%, citing economic shrinkage, falling consumer prices and a stubbornly strong baht. Most analysts think policymakers may want to save some ammunition while assessing risks and the effects of earlier support measures.

“There are fixes needed with previous measures that have been rolled out, such as the drawdown in soft loans, ” said Kobsidthi Silpachai, head of capital market research at Kasikornbank. “It is the distribution of low rates that need to be addressed”.

Economic activity has picked up in recent weeks as a result of the government’s largely successful containment of Covid-19 so far, meaning there are “no pressing reasons for the BoT to use up its remaining ammunition, ” HSBC said in a note.

The BoT has forecast South-East Asia’s second-largest economy will shrink by a record 8.1% this year but recently said there had been some improvement after the lockdown was eased.

Economist Takit Chardcherdsak at Asia Plus Securities said the MPC might ease policy in the fourth quarter because of “unknown factors”. — Reuters

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