Thailand: Bank of Thailand unexpectedly cuts interest rates
October 17, 2012
At its 17 October monetary policy meeting, the Bank of Thailand (BoT) decided to cut the one-day repurchase rate by 25 basis points to 2.75%, in a move that was not expected by the market. The decision represents the first rate cut since officials slashed interest rates from 3.25% to 3.00% in January. In their statement, monetary authorities signalled that, although the economy expanded in the third quarter, feeble global demand continues to weigh on Thailand's external sector. The Bank underlined that the global economic outlook remains weak, despite further monetary easing in major economies. That said, the Central Bank acknowledged that global economic activity would gradually improve next year, but a substantial degree of uncertainty persists. Regarding price developments, the BoT noted that inflationary pressures remain contained and stated that "monetary policy easing was warranted to shore up domestic demand in the period ahead and ward off the potential negative impact from the global economy". The next monetary policy meeting is scheduled for 30 November.
Author: Ricardo Aceves, Senior Economist