BoT remains on the sidelines

The Bank of Thailand left its policy rate unchanged at 1.50%. The decision was again unanimous, indicating that the MPC does not see any imminent need to cut rates.

The Bank of Thailand remains dovish. In today's statement, the central bank highlighted that downside risks to Thai growth have been emerging from a slower global growth environment and volatility in financial markets. 

On the domestic economy, the central bank sees continued growth in the tourism sector and fiscal support as mitigating, to some extent, the downside risks from the global backdrop. 

However, the central bank reiterated that it will continue to maintain a sufficiently accommodative monetary stance, while ensuring financial stability. Weak growth and low inflation should ensure that Bank of Thailand maintains an accommodative policy stance for a long period, in our opinion. 

The weaker THB is also providing some comfort, as the central bank appears keen on ensuring that the currency stays competitive relative to its regional peers. 

"As such, the central bank remains comfortable with rates being low and is unlikely to consider any normalisation until the output gap closes, which may not be until 2016. The central bank's bias may be to add more stimulus, but the bar for further easing is high", says Barclays.