Bank of Thailand expected to refrain from more easing

The Bank of Thailand (BoT) will hold its regular meeting on 10 June. It will likely keep the policy rate on hold at 1.50%. The expectation is based on the following key factors: Recent weakness in the Thai baht (THB) should reduce pressure for an additional rate cut, at least for the time being. 

The BoT has been more focused on the exchange rate in formulating its monetary policy stance. At the April meeting, the Monetary Policy Committee voted 5:2 to cut the policy rate 25bps, citing the need to offset pressure on the export sector from THB strength. 

The BoT will also likely wait for the two consecutive rate cuts in March and April to pass through to the economy before it makes a further move. 

Fiscal policy is expected to play a greater role in driving economic growth for the rest of this year. Finance Minister Sommai Phasee said on 3 June that there is no need for further rate cuts given the government's plans to accelerate the disbursement of the investment budget to 87% by end-September from 41.6% currently.