Bank of Thailand Leaves Key Interest Rate at 1.5%

August 3, 2016

Monetary officials in Thailand implemented eight reductions of 25 basis points between November 2011 and April 2015. As expected, they left the 1.5% rate level since April 2015 unchanged.  A new statement released after the latest policy meeting does not change projected growth but attaches greater downside risk to the baseline forecast than existed at the previous meeting in June.  Several risks are enumerated: uncertainties following the British referendum (‘Brexit’), concerns over the European financial sector, and political developments abroad, which could impact confidence and the economic outlook of trading partners going forward. Meanwhile, financial stability risks in China remained.” Inflation lies below target, and the statement suggests that it may take longer to return to in-target territory.  All in all, “the Committee saw the need to preserve policy space given that the Thai economy would still be facing more uncertainties going forward, particularly the fragile global economic recovery, and uncertainties in the monetary policy directions of major advanced economies that might induce greater capital flow and exchange rate volatility.” The meeting’s decision to retain the 1.5% central bank rate level was reached unanimously.

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



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