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BoT maintains benchmark interest rate at 1.50 pct, as broadly expected

The Bank of Thailand (BoT) has kept its policy rate unchanged in a unanimous vote, a move expected by all but one of the 25 analysts surveyed by Bloomberg. Leading indicators of domestic demand point to a moderation in sequential GDP growth in Q4 2016. The last time the central bank eased its policy stance was in April 2015.

The BoT maintains its benchmark rate at 1.50 percent at the monetary policy meeting held today. Domestic indicators are pointing to some easing of sequential GDP growth in Q4 2016. Growth in private investment has been entrenched at low levels, posting its fourth straight month of y/y contraction in October. 

Similarly, growth in private consumption has been capped. Combined, the recovery in domestic demand has been modest at best keeping inflationary pressures at bay. However, credit growth is sluggish and loan quality continues to worsen. With credit growth at 4.5 percent y/y as of October, it is below nominal GDP growth. Meanwhile, the ratio of gross nonperforming loans to total has been slowly rising since the end of 2014.

"Amidst prolonged sluggish domestic demand, we expect BoT to maintain a supportive stance and keep its policy rate on hold through 2017," ANZ commented in its latest research report.

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