The Bank of Thailand voted unanimously to maintain the key interest rate on hold at 1.5 percent today, consistent with market expectations. This is for the 20th consecutive time that the BoT has kept its benchmark rate unchanged at 1.5 percent.
While domestic economy saw some acceleration, the Bank of Thailand is of the view that an accommodative policy is still required. Economic activity has turned a corner yet the emerging improvement is still restricted. Private investment is tentatively rising, recording its third consecutive month of marginally positive growth after contracting for a year. But private consumption has yet to sufficiently rebound.
In spite of the nascent improvement, demand-pull inflationary pressures continue to be subdued. The Bank of Thailand expects inflation to reach its inflation goal by mid-2018. In October, headline inflation came in at 0.86 percent year-on-year, well-below the BoT’s 1 percent-4 percent target range. At present, there does not seem any urgency for the central bank to alter its monetary stance in either direction.
“Although the benchmark rate remains near a record low of 1.25 percent, the strength of the business cycle or inflation dynamics do not call for tightening”, added ANZ.
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