Thailand: Bank of Thailand leaves one-day repurchase rate unchanged
January 28, 2015
At its 28 January monetary policy meeting, the Bank of Thailand (BoT) decided to maintain the one-day repurchase rate at 2.00%. The decision was in line with market expectations. The Monetary Policy Committee continues to show divergence among its members regarding the one-day repurchase rate action. Two members of the seven-member committee voted in favor of reducing the rate by 25 basis points. The one-day repurchase rate currently sits at the lowest level in four years. The next monetary policy meeting is scheduled for 11 March 2015.
Following the Thai economy’s disappointing performance in the third quarter of 2014, economic activity picked up in the last quarter of the year. According to the Bank, improving exports and tourism offset weaker domestic demand. In the short term, the economy is expected to continue the recovery as a decline in energy prices will strengthen the country’s external accounts. Nevertheless, the Bank added that, “key downside risks from global economy remain, including slow recovery in major trading partner economies, lingering political uncertainty, and policy divergence among major central banks which could result in higher volatility in the global financial markets.”
Headline inflation has been declining due to a marked fall in energy prices. This increases the probability of inflation falling below the lower bound of the Bank’s range of plus/minus 1.5% around a target of 3.0%. Inflation is expected to rebound in the second half of this year in tandem with a recovery in global oil prices.
Author: Dirina Mançellari, Senior Economist