Monetary Policy Eased in Thailand

May 29, 2013

The Bank of Thailand’s policy interest rate has been reduced for the first time in 7-1/2 months.  The cut of 25 basis points to 2.5% was expected by only about half of surveyed analysts.  A statement from monetary officials left open the possibility to further easing if needed and explained today’s action as follows:

Downside risks have increased from lower‐than expected growth in the first quarter of this year. As inflation remains well within the target,monetary policy has room to further cushion against downside risks to domestic demand.

Thailand’s central bank rate was slashed in the Great Recession from 3.75% to 1.25%.  Nine subsequent rate hikes between July 2010 and August 2011 restored all by 25 basis points of the earlier series of cuts.  Today’s reduction is the fourth move of 25 basis points.  The three earlier moves were implemented in November 2011, January 2012, and October 2012.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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