Thailand: Bank of Thailand stands pat in August
August 16, 2017
At its 16 August monetary policy meeting, the Bank of Thailand (BoT) unanimously decided to keep the one-day repurchase rate at 1.50%, where it has been for over two years. The decision was in line with market expectations. In light of current economic conditions and persistently-subdued inflation, the Bank decided to remain accommodative and to hold rates firm.
The Bank of Thailand’s assessment on economic growth was positive on the basis of strong external demand as well as improvements in domestic demand, although they have not been broad based. Export growth was the lead performer, and tourism revenue and agricultural output were the supporting actors in the Q2 growth story. However, weak domestic demand, state price controls and subsidies have inhibited inflation and it remains well below the Bank’s target range of 1.0%–4.0%. The Bank noted that headline inflation had risen at a slower pace since the previous meeting than it had expected due to lower fresh food prices and base effects from last year’s drought.
The tone of the meeting was neutral and relatively unchanged from its previous meeting. There was little forward guidance provided, although the BoT is likely to keep rates on hold for the rest of the year to allow for further economic expansion, to stimulate domestic demand, and to generate traction in inflation rates.
The next monetary policy meeting will be held on 27 September.
Author: Lindsey Ice, Economist