Thailand: Bank of Thailand stays put for second time
May 2, 2012
At its 2 May monetary policy meeting, the Bank of Thailand (BoT) decided to keep the one-day repurchase rate unchanged at 3.00%, in a decision widely expected by the market. The Bank's decision means that monetary authorities have left the main monetary policy rate unchanged for two consecutive meetings, following on two consecutive 25 basis-point rate cuts in November and January. In its statement, monetary officials argued that the recovery in the first quarter was faster than expected. Manufacturing production is showing signs of improvement and is expected to return to pre-flooding levels by the end of the second quarter. According to the BoT, "exports were expected to rebound sooner than previously assessed in tandem with the recovery in manufacturing production". Moreover, the Bank underlined that inflation fell considerably in April as a result of the high base of comparison recorded in the same month last year. However, monetary officials pointed out that "upward inflationary pressure in the period ahead remained". Finally, authorities acknowledged that while the recent accommodative stance has helped to shore up confidence, external factors continue to be a major risk to the growth outlook. The next monetary policy meeting is scheduled for 13 June.
Author: Ricardo Aceves, Senior Economist