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The Bank of Thailand in its monetary policy meeting held today, maintained status quo, on rising uncertainty over Thursday’s Brexit referendum. Further, global financial markets remain choppy ahead of Britain’s election to decide whether or not UK will remain a member of the European Union.
The BoT held its one-day bond re-purchase rate unchanged at 1.5 percent, with monetary policy committee members voting unanimously in favor, it said in Bangkok on Wednesday. All but one of the 22 economists surveyed by Bloomberg News predicted the decision, with UBS AG forecasting a 25 basis-point cut, Bloomberg reported.
Policymakers in the Southeast nation seem reluctant over an easing policy, despite near-zero inflation and weak consumer spending, judging that a further lower interest rate would not provide any support to the economy, especially at a time when it is underpinned by weak structural factors.
"The committee saw merit in preserving policy space given that the Thai economy would still be facing risks going forward, such as the fragile global economic recovery, monetary policy divergence among major advanced economies, the result of the EU referendum in the UK ('Brexit') and financial stability concerns in China," Bloomberg reported, citing the bank of Thailand’s monetary policy statement.
Moreover, the central bank has also maintained status quo over its economic growth forecast this year at 3.1 percent. However, it lowered its forecast for next year to 3.2 percent, from 3.3 percent previously. It added that exports are most likely to contract 2.5 percent this year, worst than the 2 percent decline it had predicted in March.
"We didn’t cut the rate because growth is still in line with forecasts and inflation is moving back to the target band," said Jaturong Jantarangs, Assistant Governor, BoT.
According to a report published by the International Monetary Fund, earlier this month, the country has scope to ease policy rate, given the sluggish growth and low inflation persistent in the economy.
At 9:10AM GMT, the Thai Baht (THB) rose 0.16 percent to 35.24 on the Stock Exchange of Thailand.
