Bank of Thailand (BOT) is likely to keep its policy rate steady this week. GDP growth momentum remains weak, dragged by a weak private sector demand. There is not much that the BOT can do on this front though. Households continue to deleverage while plenty of excess capacity means business owners refrain from making fresh investments. 

That the government is aggressive in trying to spur growth momentum into 2016 means there is also less pressure on the BOT to act. Among the string of measures that have been introduced by the government include an extra spending of up to USD 3.8bn in rural area development, a new housing loan program and generous tax deductions. More importantly, the first phase of the government's USD 50bn worth of public infrastructure projects is to be kicked off in 2016. 

Looking further ahead, the BOT is expected to start tightening its policy stance once GDP growth can be sustained in the 3.5-4.0% range. As it is, household debt in excess of 80% of GDP remains a policy concern for the longer-term. For now, the central bank would continue to keep rates low, also partly as a way to facilitate a softer currency.