Thailand: Bank of Thailand cuts one-day repurchase rate in a surprise move
March 11, 2015
At its 11 March monetary policy meeting, the Bank of Thailand (BoT) decided to cut the one-day repurchase rate by 25 basis points from 2.00% to 1.75%. The move caught markets by surprise as they expected the Bank to keep the repo rate on hold at 2.00% where is had been since April of last year. Four of the seven members of the committee voted in favor of cutting the rate. As a result, the one-day repurchase rate now sits at an over-four-year low. The next monetary policy meeting is scheduled for 28 April.
According to the Bank, Thailand’s economy recovered slowly during the final quarter of 2014 and the first months of 2015. Confidence in the private sector remained weak, which led to growth rates in private consumption and investment being softer than expected. The Bank added that, looking forward, “the economy is projected to recover at a slower pace than formerly assessed. […] Meanwhile, tourism is projected to recover steadily, partially offsetting the weaker domestic demand.”
Against a backdrop of lower global oil prices, consumer prices tallied decreases in annual terms at the outset of the year. Regarding inflation projections in the periods ahead, the BoT commented that, “inflationary pressure is forecasted to remain at a lower level, close to the committee’s assessment at the last meeting.” The slower than expected economic recovery, which coupled with low inflation, drove the Bank’s decision to cut the one-day repurchase rate.
Author: Dirina Mançellari, Senior Economist