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Bank of Thailand lowers policy rate to 1½%, third decrease this year
By Angela McDaniels
Tacoma, Wash., April 29 – Bank of Thailand’s Monetary Policy Committee voted five to two at its meeting on Wednesday to reduce the policy rate by 25 basis points to 1½%.
The committee said the Thai economy is projected to recover at a slower pace than assessed in the previous meeting. The pickup in public investment and a positive trend in tourism should help shore up the economy but could not fully offset the weaker-than-expected exports of goods and private consumption in the first quarter of 2015, according to a news release from the bank.
Inflationary pressure continues to decline broadly in line with softer-than-expected domestic demand, and production costs, particularly oil prices, remain low. The committee said this development increases the risks of prolonged negative headline inflation and the inflation expectation trending downward.
During deliberation, most members decided that monetary policy should be eased further in order to add more support to the economic recovery amid higher downside risks and to anchor inflation expectations.
Two members, however, voted to keep the policy rate unchanged, judging that previous monetary policy actions have contributed to continuing accommodative monetary conditions while the policy space for additional easing is limited. In their view, a recent pickup in fiscal stimulus should help buoy the economy to a certain degree; therefore, the policy rate should be maintained while the committee waits for a clearer assessment of the impact of the policy mix on the economy and financial stability.
The committee lowered the rate by 25 bps to 1¾% in March and by 25 bps to 2% in February.
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