Thailand: BoT pauses rate, downgrades GDP

  • The Bank of Thailand (BoT) kept its benchmark rate on hold at 0.50% on 24 Jun 20 to preserve policy space amid heightened economic headwinds, but predicted a deeper GDP contraction of 8.1% for 2020.
  • The central bank’s monetary policy committee (MPC) voted unanimously to leave the one-day repurchase rate untouched.
  • The BoT in Marc 20 sharply downgraded its forecast of Thailand’s full-year economic outlook to a 5.3% contraction.
  • The economy is heading for recession after shrinking 1.8% y/y in 1Q20, the steepest decline since 4Q11, when the country was suffering the worst flooding in decades.
  • The central bank’s latest economic forecast appears more pessimistic than that of the National Economic and Social Development Council, the state planning agency, which sees a contraction of 5-6% in 2020.
  • The central bank, however, raised its forecast for Thai economic growth in 2021 to 5% from the 3% predicted in Mar 20, MPC secretary Titanun Mallikamas said.
  • Headline inflation is expected to be -1.7% in 2020 before bouncing back to 0.9% in 2021.
  • The MPC was concerned that the baht’s strength against the US dollar could deal another blow to the country’s economy. It would need to evaluate whether additional measures to curb the baht’s value are need, he said.

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