Thailand: Bank of Thailand cuts rates to support growth
May 29, 2013
At its 29 May monetary policy meeting, the Bank of Thailand (BoT) cut the one-day repurchase rate by 25 basis points to 2.50%, in a decision broadly expected by the market. The decision marks the first rate cut since October last year.
According to the BoT, the global economy is recovering at a slower-than-expected pace. In particular, slower growth in China and the rest of the Asian economies is delaying the recovery in Thailand's exports. Regarding the Thai economy, GDP expanded less than expected in Q1 and the slowdown may have a negative impact on the overall economic momentum, particularly if it translates into a delay in key government infrastructure investment.
The decision to cut the rate was unanimous. Monetary authorities did not make any reference to the recent appreciation of the baht as a rationale behind the rate cut and only cited downside risks to the growth outlook. According to its statement, the BoT "will closely monitor developments of the Thai economy, financial stability risks as well as capital flow situation, and stand ready to take appropriate action as warranted".
FocusEconomics Consensus Forecast panellists expect the one-day repurchase rate to end 2013 at 2.92%. In 2014, the panel expects the monetary policy rate to end at 3.20%.
Author: Armando Ciccarelli, Head of Data Solutions