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Barnabas Gan, Economist at UOB Group, gives his views on the latest Bank of Thailand (BoT) monetary policy.

Key Quotes

“The Bank of Thailand (BOT) kept its one-day repurchase rate unchanged at 0.50% for the third consecutive meeting. The last time it made a move was in May when the benchmark rate was cut by 25 basis points. The decision to keep its policy rate unchanged was voted unanimously by all seven committee members.”

“The central bank upgraded its GDP outlook to -7.8% in 2020, up from a prior forecast of – 8.1%. In the same vein, BOT also viewed that headline inflation “would be less negative” at -0.9% in 2020, up from a previous outlook of -1.7%.”

“Risks that may effectively cap economic growth included the deteriorating household debt service capability as the labour market outlook remained soft. In response, BOT cited that financial institutions should expedite debt restructuring for both households and businesses.”

“With Thailand’s benchmark rate already at its record low, policy space is increasingly limited. In view of the improving economic outlook and a potential uptick in consumer prices going forward, BOT could see more reluctance in engaging further rate cuts in the year ahead. Fiscal measures are expected to play a greater role going forward should more stimulus be required. As such, we now expect BOT to keep its benchmark rate unchanged at 0.50% for the rest of 2020.”