Thailand Gets First Interest Rate Cut in Four Months

March 12, 2014

Thailand’s Monetary Policy Committee cut the Bank of Thailand policy interest rate to 2.0% from 2.25%.  Prior reductions of 25 basis points were implemented in November 2011, January and November 2012, and May and November 2013.  Before that, officials had raised the key rate in nine moves by 225 bps to 3.5% from 1.25% after cutting such by 250 basis points during the Great Recession.  Today’s decision to counter politically-related weak growth was only approved by a narrow 4 to 3 vote, with the dissenters arguing that monetary policy is ill-suited to address Thailand’s problems.  The prior cut in November 2013 had passed by a 6-1 margin.  The majority opinion today maintained that

Prolonged political uncertainties would continue to impede the recovery of private consumption and investment. Core inflation has edged up but remains subdued. Monetary policy has some scope to ease, in order to lend more support to the economy and ensure continuous financial accommodation.

Thailand’s next scheduled monetary policy announcement will be on April 23.  GDP growth slowed last quarter to less than 0.5% annualized with a 2.4% 4Q-over4Q change.  Consumer prices increased 2.0% between February 2013 and February 2014.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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