Bank of Thailand Left Key Interest Rate Unchanged This Time

August 5, 2015

A statement released after Bank of Thailand officials decided unanimously not to change their 1.5% policy interest rate foresees gradual economic recovery, helped in part by a softer Thai baht, projects that inflation, which is now negative, will rise in the second half of this year and “judged that the conduct of monetary policy has thus far eased monetary conditions, while the direction of exchange rate movement has stayed conducive to the economic recovery.”  But officials admit that inflation may follow a lower trajectory than assumed “as a result of limited demand-side pressure and slower-than-projected global oil price recovery.”  That caveat leaves the door open to the possibility of an additional rate cut in the future.  By votes of 4-3 in early March and 5-2 in late April, the policy interest rate was cut each time by 25 basis pints to a 5-year low, and before that six 25-bp reductions from a peak of 3.5% were administered between November 2011 and March 2014.  Altogether, the rate has been lowered by 2 full percentage points. 

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



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