Thailand: Bank of Thailand holds interest rate, downgrades growth outlook

  • The Bank of Thailand (BoT) left its benchmark interest rate unchanged after Aug 19’s surprise reduction, and said it may consider steps to rein in the currency’s strength as economic growth weakens.
  • The Monetary Policy Committee voted unanimously on 25 Sep 19 to hold its key rate at 1.50%, the central bank said in a statement. That was in line with the forecasts of 21 of 29 economists surveyed by Bloomberg, with the rest expecting a cut to 1.25%.
  • Authorities are providing monetary and fiscal support to spur growth, which the central bank now expects will be lower in 2019 than previously forecast. Aside from global concerns, growth is also being undermined by the baht, which has gained more than 6% against the dollar so far in 2019, the best performer in Asia.
  • Policy makers “expressed concerns” about the currency’s appreciation, “which might affect the economy to a larger degree amid heightened uncertainties pertaining to the external front,” the central bank said in a statement. The MPC will consider “additional appropriate measures if necessary,” it said.
  • The central bank cut its growth forecast for the year to 2.8% from 3.3% predicted in Jun 19, and lowered 2020’s forecast to 3.3% from 3.7%. It also sees exports contracting 1% in 2019, compared with a previous projection of no growth.

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