Bank of Thailand

February 20, 2013

Thailand’s Monetary Policy Committee decided to leave the 2.75% one-day repo rate unchanged even though it’s revising upcoming growth a bit higher and concedes that inflation is up somewhat as well because of elevated energy costs.  Nevertheless, there was one dissent in favor of a 25-basis point cut in today’s 6-1 vote.  The prior no-change decision on January 9 had been unanimous.  This time, “one member viewed risks stemming from volatile capital flows and fragile economic momentum to warrant a 0.25 percent reduction.”   The statement concludes with a hint of a bias toward further ease, promising to “continue to closely monitor risks to financial stability as well as the capital flow situation and stand ready to take actions as appropriate.”

In the Great Recession period, the Bank of Thailand’s reference interest rate was slashed four times between December 2008 and August 2009 by a total of 250 basis points to 1.25%.  Such was later hiked nine times between July 2010 and August 2011 to a cresting level of 3.5%.  Then three cuts of 25 bps each were implemented in November 2011, January 2012 and, most recently, October 2012.  Officials call the present 2.75% rate level accommodative but appropriate in light of in-target inflation and “remaining uncertainties surrounding the global economic outlook and risks to domestic financial stability including from rising asset prices.”

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



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