BoT cuts key rate to 1.25pc
The Bank of Thailand (BoT) cut its benchmark interest rate for the second time in three months and said it will ease rules on outflows to curb the currency’s gains.
Five of the seven Monetary Policy Committee members voted to cut the key rate by a quarter-percentage point to 1.25 per cent, said the central bank in a statement. That matches a record low and was in line with the forecasts of 16 of the 26 economists in a Bloomberg survey.
Officials said the central bank was worried about the strength of the baht, which might continue to weigh on the economy.
BoT would ease rules on outflows and consider further steps to rein in the currency, they said.
The baht extended losses, falling as much as 0.7 per cent to 30.399 per US dollar, and was at 30.377 as of 2.15pm, here.
Thai authorities are stepping up monetary and fiscal support to spur an economy that’s on course for its weakest growth in five years.
The baht has gained more than eight per cent against the US dollar in the past year, the best performer in emerging markets, curbing exports and tourism in the trade-reliant nation.
Inflation remains subdued, slowing to a more than two-year low of 0.11 per cent last month, well below the central bank’s one to four per cent annual target.
Finance Minister Uttama Savanayana said this week the central bank had proposed to narrow the band for next year for better monetary policy management.
The central bank had taken measures to curb short-term inflows to rein in the currency, and said it was planning to ease rules on capital outflows.