Bank of Thailand stands pat in August, likely to keep monetary policy steady through 2017

As was widely anticipated, the Thai central bank, Bank of Thailand, kept its key policy rate on hold during its meeting on Wednesday. It was a unanimous decision to keep the benchmark rate on hold at 1.50 percent. Monetary policy of BoT has remained steady since the beginning of 2015 and is expected to remain so at least through 2017, stated ANZ in a research report.

According to Bank of Thailand, the economic growth prospects have strengthened further. Yet, there is a narrow in breadth, underpinned mainly by goods exports and tourism. A more widespread rebound encompassing domestic demand is yet to materialise. While farm incomes continue to rise, wage growth in the manufacturing sector has been unsuccessful in gaining traction.

Therefore, the purchasing power continues to be subdued and would not likely put considerable pressure on future inflation. At 1.50 percent, the benchmark rate is quite accommodative. Further, monetary easing is unlikely to make a dent on the economic growth as it is structural issues that are averting growth from taking hold in the domestic sector, stated ANZ.

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