Thailand: Bank of Thailand cuts one-day repurchase rate as political turmoil strains economy
March 12, 2014
At its 12 March monetary policy meeting, the Bank of Thailand (BoT) decided to cut the one-day repurchase rate by 25 basis points, reducing it from 2.25% to 2.00%. The decision was broadly expected by the market. This marks the second meeting in which the Bank decided to cut its repurchase rate in order to stimulate the economy following three successive meetings in which it left the rate on hold. The one-day repurchase rate currently sits at its lowest level in three years. The Bank acknowledged that the ongoing political tension has been a drag on private consumption and investment. According to the BoT, “tourism has felt more impact from the ongoing political situation.” However, exports of goods are expected to improve mainly due to the recovery in major economies. Regarding price developments, the Monetary Policy Committee (MPC) stated that, “core inflation has edged up, but remains subdued.” Four of the seven members of the MCP voted in favor of cutting the one-day repurchase rate, thereby outvoting three members who advocated for keeping the repurchase rate at 2.25%. The next monetary policy meeting is scheduled for 23 April. FocusEconomics Consensus Forecast panelists expect the one-day repurchase rate to end 2014 at 2.92%. In 2015, the panel expects the monetary policy rate to end the year at 3.20%.
Author: Dirina Mançellari, Senior Economist