Bank of Thailand

May 11, 2016

The 1.25% policy interest rate was retained by a unanimous vote of the Monetary Policy Committee.  This is the lowest rate since June 2010 and has been unchanged since 25-basis point cuts engineered in March and April of 2015.  The statement explaining today’s decision reads dovishly, conceding that “the balance of risks to economic growth was judged to be tilted more to the downside than previously assessed.” Also”the baht, which strengthened against some trading partner currencies in some recent periods, might not be as conducive to the economic recovery as it could be,” and “demand side inflationary pressure remained subdued as reflected by stable core inflation.”  Headline inflation only recently moved above zero but is not expected to move inside of the 1-4% target until much later this year.  Like the previous statement, officials talk about “preserving policy space while risks to financial stability from search-for-yield behavior continued to warrant close monitoring.”  Economic growth should be near 3%.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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