Bank of Thailand stands pat, likely to keep rate on hold throughout 2018

Thai central bank kept its policy rate on hold at 1.50 percent today during its meeting. The decision was unanimous. But on MPC member was not able to attend the meeting. The Bank of Thailand maintained that economic growth has and should continue to gain more traction.

It also repeated that demand-pull pressures on inflation remain low. Private consumption growth continues to be moderate because of slow growth in household income and high debt levels. On the other hand, the statement was positive on overall investment with government projects crowding in private investment, noted ANS in a research report.

Also, the central bank was of the view that the economy has not felt pressure from tightening global liquidity. Should such pressure rise, it stands ready to use available policy tools. The BoT acknowledged that the volatility of Thai baht has increased and might continue. Meanwhile, the rise in volatility has not been unique to the baht.

Both headline and core inflation are likely to rise gradually. Apart from low food prices, structural changes in the economy such as the growth in ecommerce and greater competition have affected pricing power.

While the overall growth continues to be buoyant, some activity indicators such as the private investment index and imports have weakened lately.

“Against this backdrop we see no reason for the BoT to shift away from its currently accommodative stance. We expect the BoT to stay on hold through 2018”, added ANZ.

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