Bank of Thailand kept rates unchanged on Wednesday

As widely expected, Bank of Thailand (BOT) kept rates unchanged on Wednesday. That it was a unanimous decision was somewhat surprising. The central bank sees a gradual recovery in the economy, on the back of an accelerated fiscal spending and a slight improvement in private consumption. That said, downside risks on growth are still seen to persist on the external front, which explains the need to sustain the central bank's accommodative policy stance. 

At the same time, the BOT is encouraged by the slight rebound in CPI inflation, which came in at -0.8% (YoY) in Oct15. The central bank seems convinced that deflationary risks are contained and inflation has pretty much bottomed out. Note that the CPI inflation is not expected to return to the positive in early-2016 and likely to average around 1.5-2.0% in 2016. This is still below the central bank's medium-term inflation target but it is consistent with the fact that current GDP growth momentum remains below potential. 

No hint of an impending policy move by the BOT in the near-term. The next rate move is still likely to be a hike rather than a cut. Not that it is going to happen within the next year though. Expect steady rates to persist for now.