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Thailand Monetary Policy February 2019

Thailand: Bank of Thailand stands pat in March

As expected by market analysts, the Monetary Policy Committee of the Bank of Thailand stood pat at its 20 March meeting and kept the policy rate at 1.75% in a unanimous vote. This contrasts the previous two votes to keep the policy rate unchanged on 6 February and 19 December, which had drawn opposition to holding rates.

The decision came on the back of largely unchanged inflation expectations and robust economic growth prospects. The chiefly unchanged inflation reflects the expectation of higher-than-previously-estimated energy and fresh food prices, while core inflation expectations were lowered slightly. Although subdued core inflation is generally a sign of weak domestic demand pressures, the Bank noted that more structural cost reductions attributed to lower core inflation. Some of these changes include “the expansion of e-commerce, rising price competition, and technological development which reduced the cost of production”. As such, the Bank still expects the Thai economy to grow at a robust, albeit slightly softer, pace compared to its previous forecast.

Looking forward, the Monetary Policy Committee judged “the current accommodative monetary policy stance would remain appropriate” in the short-term, while the Committee also pledged to continue monitoring developments relating to economic growth, inflation and the financial markets. The next monetary policy meeting is scheduled for 8 May.

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