Bank of Thai­land keeps rate un­changed at 0.50pc

The Pak Banker - - FRONT PAGE - BANGKOK -AFP

The Bank of Thai­land (BoT) left its key in­ter­est rate un­changed at a record low on Wed­nes­day and up­graded its GDP out­look slightly as the econ­omy showed some signs of re­cov­ery from the fall­out of the coro­n­avirus pan­demic. The BoT's mon­e­tary pol­icy com­mit­tee voted unan­i­mously to keep the one-day re­pur­chase rate steady at a record low of 0.50% for a third straight meet­ing.

All 18 econ­o­mists in a Reuters poll had ex­pected the cen­tral bank to re­main on hold af­ter it al­ready cut rates by 75 ba­sis points so far this year. The BoT also raised its gross do­mes­tic prod­uct (GDP) fore­cast for 2020, ex­pect­ing the econ­omy to shrink 7.8% this year com­pared to a pre­vi­ous fore­cast for a record 8.1% con­trac­tion.

In a brief­ing af­ter the de­ci­sion, As­sis­tant Gov­er­nor Ti­ta­nun Mal­lika­mas said cen­tral bank pol­icy re­mained ac­com­moda­tive but fis­cal pol­icy should be the driv­ing force in a re­cov­ery, fo­cus­ing on jobs and eco­nomic re­struc­tur­ing. "Go­ing for­ward, gov­ern­ment poli­cies from var­i­ous agen­cies needed to be more tar­geted and timely," he said. The baht was lit­tle changed on the de­ci­sion, down 0.5% against the dol­lar as of 2.16pm in Bangkok.

"The Thai econ­omy re­mains weak. The political sit­u­a­tion could pose an ad­di­tional risk to the econ­omy, given on­go­ing protests," said Tim Lee­la­haphan, an econ­o­mist at Stan­dard Char­tered Plc in Bangkok."We still ex­pect an­other rate cut in the fourth quar­ter un­less fis­cal and tar­geted mon­e­tary mea­sures are stepped up."

The cen­tral bank re­vised up its growth fore­cast for this year, pre­dict­ing a 7.8% con­trac­tion com­pared with a pre­vi­ous pro­jec­tion of an 8.1% de­cline, but cut next year's fore­cast to 3.6% growth from 5% pre­vi­ously.

Thai­land will un­dergo a tran­si­tion in fis­cal and mon­e­tary pol­icy lead­er­ship over the next few months. Gov­er­nor Veerathai San­tiprab­hob is leav­ing the cen­tral bank at the end of this month when his five-year term ex­pires, hand­ing over to Setha­put Suthi­wartNaruep­ut, a mem­ber of the Mon­e­tary Pol­icy Com­mit­tee (MPC). The gov­ern­ment also is seek­ing a re­place­ment for Fi­nance Min­is­ter Predee Daochai, who re­signed in early Septem­ber af­ter less than a month in the po­si­tion.

Mr Veerathai said in a re­cent in­ter­view that the bank has been study­ing un­con­ven­tional pol­icy steps such as yield-curve con­trol, but doesn't think they're needed right now. While all op­tions, in­clud­ing in­ter­e­strate cuts, re­main on the ta­ble, tar­geted poli­cies that get funds to the sec­tors that need them can be most ef­fec­tive, he said.

It will take two years for the econ­omy to re­turn to its pre-pan­demic level The MPC will as­sess the need for any fresh steps in the FX mar­ket, as a pos­si­ble re­bound in the baht could af­fect the eco­nomic re­cov­ery The bank raised its in­fla­tion fore­cast for this year, to - 0.9% from -1.7% in June, and for 2021 to 1% from 0.9%.

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