Bank of Thailand Keeps Status Quo after 5-2 Vote

January 28, 2015

Thailand’s policy interest rate will remain at 2.0%, its level since a 25-basis point cut last March.  A debate over the implications for inflation of lower oil prices is described in a released statement.  According to the 5-person majority that favored the present level of monetary accommodation over cutting the interest further,

A marked fall in energy prices increased the probability of breaching the lower bound of the inflation target in 2015, but is not considered deflation because domestic demand continues to expand and non-oil prices donot decline. Core inflation thus remained stable. In addition, headline inflation is expected to rebound in the second half of 2015, in tandem with global oil prices following more balanced conditions in the global oil market. Risks to overall financial stability remain contained, but household loan quality and asset price movements warrant continued monitoring.

The majority projects a continuing recovery but identifies a number of downside growth risks that need to be watched.  Six interest rate cuts, each by 25 basis points, were engineered between November 2011 and March 2014.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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