Bank of Thailand: Split Vote Favors Unchanged Interest Rate

September 5, 2012

A statement released after Thailand’s Monetary Policy Committee kept its policy rate at 3.0% found Thai domestic demand to be expanding well, observed that net exports were likely to be dampened even more by persistent global risks, and predicted in-target inflation over the policy-relevant time horizon.  Similar to the prior meeting on July 25, two committee members dissented in favor of cutting the interest rate by 25 basis points.  July’s vote was 5-2, while today’s was 3-2, with two members unable to attend.  The statement calls the current policy stance “accommodative” and promises to monitor credit growth, which has been “rapid in some sectors.” 

Thai GDP climbed nearly 14% at an annualized rate last quarter and by 4.2% from the second quarter of 2011.  Consumer prices increased 2.7% between July 2011 and July 2012.

Rate history:  There were four cuts totaling 250 bps from 3.75% to 1.25% made from December 2008 to August 2009.  Beginning in July 2010 and ending in August 2011, nine hikes of 25 bps each were administered.  The last change, a cut of 25 bps in January 2012, was a follow-up action to a similarly-sized reduction in November 2011.  Unlike the decisions this month and in July which carried dissents in favor of further easing, the June 13th vote had been unanimous.

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



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