Bank of Thailand

September 14, 2016

Thailand’s Monetary Policy Committee voted unanimously to again leave policy on hold. The overnight repo rate has been at 1.50% since the last reduction in April 2015. A released statement¬†projects growth slightly above 3.0% but also stresses an abundance of domestic and external uncertainties. Inflation is barely above zero but expected to rise into target by a year from now. Like many central bankers, Thailand’s are wrestling with balancing the perceived need for loose policy but concern about potential money market damage resulting from prolonged very low interest rates. Despite monetary accommodation as attested by low real interest rates,

The baht appreciated against key trading partner currencies over some recent periods which might not be beneficial to the ongoing economic recovery. In addition, financial stability risks from the prolonged low interest rate environment, including search-for-yield behavior, continued to warrant close monitoring.

Market participants do not anticipate a change in the central bank interest rate happening soon.

Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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