Thailand: Bank of Thailand cuts interest rates
January 25, 2012
At its 25 January monetary policy meeting, the Bank of Thailand (BoT) decided to cut interest rates by 25 basis points to 3.00%, in a move widely expected by market analysts. The decision follows the 25 basis-point reduction agreed at the 30 November meeting. Monetary officials acknowledged that the impact of the floods on the economy was greater than previously assessed. The Bank predicts that the reconstruction process, along with the recovery, will take longer than expected and that manufacturing output is unlikely to be back on track until the third quarter. Although the BoT recognised that inflationary pressure was low in the midst of lower global commodity prices and weakening domestic demand, it also sees some upward pressure on inflation resulting from the boost to economic activity from reconstruction spending and governmental stimulus.
Author: Ricardo Aceves, Senior Economist