BoT keeps the easing bias unchanged – UOB

Barnabas Gan, Economist at UOB Group, reviewed the recent decision by the Bank of Thailand (BoT) to reduce the benchmark rate by 25 bps.

Key Quotes

“The Bank of Thailand (BOT) decided to reduce its one-day repurchase rate by 25 basis points to 0.50%, after keeping it unchanged at its previous 25 March meeting. GDP is likely to contract more than the previous estimate, while headline inflation is likely to stay muted given low energy prices.”

“The rate cut, which will bring the benchmark rate to a new historical low, will add to further economic stimulus that has already been in place. The government had already introduced a generous three-part stimulus package estimated at around 15% of GDP. Policy-makers added that it stands ready to use additional policy tools if needed should economic growth shrinks further.”

“Bright-spots continue to be observed, including the healthy financial system seen from the adequate liquidity in the overall system while banks have strong capital funds and reserves. The accommodative monetary policy and generous fiscal measures, is expected to further alleviate the liquidity problems of households and businesses as well as support economic recovery.”