Interest Rate in Thailand
Thailand - Interest Rate
Central Bank stands pat in September but hints at future rate hikes
At its 19 September Monetary Policy Committee meeting, the Bank of Thailand opted to maintain the one-day repurchase rate at 1.50%, where it been for over three years. The decision was in line with market expectations. However, the vote was not unanimous and the Committee appears to be becoming increasingly hawkish. At this meeting, two members voted for a rate hike to 1.75%, compared to just one at the previous meeting held on 8 August.
The decision to stand pat comes amid mild price pressures, with inflation at the lower part of the Bank’s 1.0%-4.0% tolerance band. In addition, the Thai baht has been relatively unaffected by the broader emerging market selloff that has his hit neighboring countries, meaning the Bank wasn’t under pressure to hike rates to support the currency. Moreover, the Bank considered its current stance appropriate to continue supporting the economy, particularly as downside risks are mounting. A day before the Committee met, U.S. President Donald Trump announced a new round of tariffs on Chinese goods to which China immediately responded with retaliatory countermeasures. The effects of the escalating trade tensions between the United States and China could spillover and dent Thailand’s export growth.
On the other hand, the two members who voted to hike rates argued that the current expansion was sufficiently robust to warrant monetary tightening, and that the continuation of the loose monetary stance risks an accumulation of debt, which will be harder to service when rates rise. This could threaten economic growth in the longer term.
Regarding forward-looking guidance, the Bank of Thailand hinted at rate hikes going forward, noting that “monetary policy should remain accommodative, although the need for currently accommodative monetary policy would be gradually reduced”. A slim majority of FocusEconomics Consensus Forecasts panelists expect at least one rate hike this year, while nearly all panelists foresee at least one hike by the first half of next year. The split vote at September’s meeting suggests a rate hike could be on the cards before year-end, with two more meetings scheduled for November and December.
Thailand Interest Rate Forecast
FocusEconomics Consensus Forecast panelists expect the one-day repurchase rate to end 2018 at 1.64%. In 2019, the panel expects the monetary policy rate to end the year at 1.93%.
Thailand - Interest Rate Data
|Policy Interest Rate (%)||2.25||2.00||1.50||1.50||1.50|
5 years of economic forecasts for more than 30 economic indicators.
Thailand Interest Rate Chart
Source: Bank of Thailand.
|Bond Yield||2.75||0.0 %||Nov 09|
|Exchange Rate||32.97||0.17 %||Nov 09|
|Stock Market||1,669||-1.41 %||Nov 09|
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November 5, 2018
Consumer prices inched up 0.06% over the previous month in October, down from the 0.29% price increase in September.
October 30, 2018
Manufacturing output contracted 2.6% year-on-year in September, contrasting a slightly revised 0.8% expansion in August (previously reported: +0.7% year-on-year) and below market expectations of a more moderate 0.5% drop.
October 24, 2018
Thailand recorded a USD 487 million trade surplus in September, contrasting August’s USD 588 million deficit but noticeably below the USD 3.4 billion surplus recorded in the same month a year earlier.
October 1, 2018
Thai consumer prices increased 0.29% over the previous month in September, up slightly from August’s 0.26% rise.
September 27, 2018
Manufacturing output growth slowed to 0.7% year-on-year in August, down noticeably from July’s upwardly revised 4.9% (previously reported: +4.6% year-on-year) and marking the weakest reading since April 2017.