A Split Interest Rate Vote in Thailand

July 25, 2012

The Bank of Thailand’s Monetary Policy Committee disagreed 5-2 in its interest rate decision, with five committee members claiming “the current monetary policy stance to be accommodative enough to support domestic economic growth going forward and cushion, to some degree, against global economic risks.”  The other two officials voted to cut the one-day 3.0% repo rate by 25 bps to 2.75% but were overruled.  At the prior meeting on June 13, the vote not to change the policy stance had been unanimous.  The Bank of Thailand released a statement claiming growth of slightly less than assumed before yet close to potential, inflation within target, and the mix of macroeconomic policies to be “appropriate.”  The statement is ambiguous about future changes in policy, promising to “closely monitor developments in the global economy as well as domestic demand conditions and a readiness to take appropriate action as warranted.”

There has been just one rate adjustment so far in 2012, that being a reduction of 25 basis points on January 25 in follow-up to an initial cut last November 30th of similar size.  Previously, nine 25-bp rate increases were implemented from July 2010 through August 2011.  The benchmark interest rate had been reduced during the Great Recession to 1.25% from a previous crest of 3.75% that prevailed from August 2008 until December 2008.

The next interest rate announcement in Thailand is scheduled for September 5.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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