Thai central bank to keep rates low

BANGKOK: Thailand’s central bank is widely expected to leave its key interest rate unchanged at a record low after easing policy three times this year to help mitigate the economic damage from the coronavirus pandemic, a Reuters poll showed.

In the poll, 17 of 20 economists predicted that the Bank of Thailand’s (BOT) monetary policy committee would hold its one-day repurchase rate at 0.50%.

The rest forecast it would cut the rate by 25 basis points (bps) to a fresh record low of 0.25%, citing a weaker economic outlook and strength in the baht.

Most analysts think policy room is limited – after five cuts totalling 125bps since August – and policymakers may want to monitor the effects of previous easing and fiscal and monetary steps introduced to mitigate the outbreak impact.

On Friday, the BOT also announced interest rate cuts for credit cards and personal loans to help debtors.

“Past measures that have been rolled out have not yet been fully evaluated,” said Kobsidthi Silpachai, head of capital market research at Kasikornbank.

The BOT has hit its “limits on rate policy easing” as the virus lockdown has ended and the economy is back in action, ING economist Prakash Sakpal said in a research report.

Thailand has removed most restrictions to revive South-east Asia’s second-largest economy, as there has been no local virus transmissions for 28 days.

Nomura economist Charnon Boonnuch predicted no policy change this week but a further easing in the third quarter “due to a sharp economic contraction and negative headline inflation”.

The central bank recently said the economy could shrink this year more than earlier expected.

In March, it forecast a 5.3% contraction, the worst since the 199798 Asian financial crisis.

It will offer updated economic forecasts after the meeting. — Reuters