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Economist Barnabas Gan at UOB Group assessed the latest monetary policy meeting by the Bank of Thailand (BoT).

Key Quotes

“The Bank of Thailand (BOT) kept its one-day repurchase rate unchanged at 0.50%, after cutting it by 25 basis points in May. The decision to keep its policy rate unchanged was voted unanimously by all seven committee members.”

“Whilst keeping its benchmark rate unchanged, BOT downgraded its GDP growth and inflation outlook for 2020. For this year, GDP is expected to contract by 8.1%, while consumer prices are pencilled to decline 1.7%. This compares against BOT’s previous GDP and CPI outlook of -5.3% and -1.0%, respectively.”

“Policy-makers also highlighted their concern over the strengthening Thai Baht “which affects economic recovery”, suggesting that more accommodative measures may be seen in the future to stem THB’s strength.”

“With rates approaching the zero mark, policy space is increasingly limited. Policy-makers may just see its last benchmark rate cut by another 25 basis points to 0.25% to support growth and inflation in 3Q20, failing which, unconventional measures such as asset purchases or yield curve control may be adopted.”