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Thailand Monetary Policy May 2018

Thailand: Bank of Thailand holds fire in May, as expected

At its 16 May meeting, the Monetary Policy Committee of the Bank of Thailand (BoT) unanimously opted to maintain the one-day repurchase rate at 1.50%. The rate has been at 1.50% for over two years, and the decision was in line with market expectations.

In the eyes of the Committee, the Thai economy is continuing to gain traction on the back of a strong external sector and “gradual improvements” in domestic demand. The external sector is benefitting from resilient tourist inflows and robust demand for merchandise exports. On the domestic front, however, the Committee again noted that the ongoing improvement in the economy has failed to translate into notably higher household incomes. Headline inflation has increased only moderately in recent months; in April, it was just above the lower bound of the Bank’s inflation target range of 1.0%–4.0%. This justified the decision to stand pat.

In terms of forward-looking guidance, the BoT stressed that monetary policy is likely to remain accommodative, in view of still-low price pressures. The Committee cited that monetary policy “remained conducive to the continuation of economic growth”, while it expects the economy to gain further traction due to a strong external sector. However, the Bank noted that its policy is subject to change depending on developments in domestic demand and inflation.

The next monetary policy meeting will be held on 20 June.

Thailand Interest Rate Forecast

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