Thailand: Bank of Thailand unexpectedly leaves one-day repurchase rate unchanged
January 22, 2014
At its 22 January monetary policy meeting, the Bank of Thailand (BoT) decided to keep the one-day repurchase rate at 2.25%. The decision came as a surprise to the market, which had expected a 25-basis-point cut to the interest rate, mainly due to the country's current political unrest.
The decision to keep the interest rate on hold was made just a day after the government imposed a state of emergency due to ongoing anti-government protests. The Bank acknowledged that the current political crisis poses risks to growth and that it will weigh on the economy. "Sound economic fundamentals", however, should support the economy despite the short-term risks. In addition, the Monetary Policy Committee (MPC) added that, "safeguarding financial stability remains a cornerstone for economic recovery in the period ahead."
Four of the MCP's seven members voted in favor of keeping the one-day repurchase rate unchanged, outvoting three members who advocated for reducing the repurchase rate by 25 basis points.
FocusEconomics Consensus Forecast panelists expect the one-day repurchase rate to end 2014 at 2.92%. In 2015, the panel expects the monetary policy rate to end the year at 3.20%.
Author: Dirina Mançellari, Senior Economist