Thai central bank holds interest rate

[reader]

From Bloomberg News (6 Feb.)

Thailand’s central bank left its benchmark interest rate unchanged, as expected, as slower inflation and a soaring currency give policy makers room to pause after December’s hike.

Four of the six members of the Monetary Policy Committee present at the meeting voted to hold the one-day bond repurchase rate at 1.75 percent, the Bank of Thailand said in a statement on Wednesday. Two called for a 25 basis point hike, while one member was absent. All 21 economists surveyed by Bloomberg predicted the decision.

“The committee viewed that accommodative monetary policy would remain appropriate in the period ahead,” the central bank said, as it continues to monitor economic growth, inflation and financial stability.

Key Insights

• After the first rate hike in seven years in December, economists see the Bank of Thailand on hold this year, given subdued inflation and the U.S. Federal Reserve’s shift to a prolonged pause in its tightening cycle
• Policy makers cited financial stability risks as a reason to remain cautious. While recent credit restrictions would help curb “vulnerabilities” in the financial system, developments in the mortgage loan market, real estate sector, and rising debt in the economy “still warranted monitoring,” the bank said
• Consumer prices rose at the slowest pace in 18 months in January, gaining just 0.3 percent from a year ago, on the back of low oil prices and a strong baht. Inflation has undershot the central bank’s 1 percent to 4 percent target range in the past three months
• The baht has surged more than 4 percent against the dollar this year, the best performer in a basket of major Asian currencies tracked by Bloomberg. The central bank said the currency will remain “volatile” due to external risks
• Finance Minister Apisak Tantivorawong said last week an overshooting currency will put export-reliant Thailand at a disadvantage and it is the central bank’s job to curb swings in the baht

Continues at

https://www.bloomberg.com/news/articles/2019-02-06/thailand-holds-interest-rate-as-inflation-eases-baht-gains

 

[reader]

From Bloomberg News (4 Apr.)

'Interest rates have been 'too low, too long' -- Central Bank Governor

Thailand’s central bank Governor Veerathai Santiprabhob said there are still financial frailties in the economy, which are being tackled through a combination of measures, including macro-prudential steps and the monetary stance.

Interest rates have been “low for too long,” leading to an under-pricing of risk in the financial sector, which prompted the Bank of Thailand to raise its policy rate in December, Veerathai said in an interview Thursday with Bloomberg Television’s Haslinda Amin in Chiang Rai, northern Thailand. Those risks are still there, he said.

“It will take some time to address concerns on financial fragilities and they can’t be addressed by one policy alone,” he said.

The central bank is trying to balance competing challenges in the economy, including elevated debt levels, slowing growth and subdued inflation. Officials have in recent weeks flagged the possibility of gradual monetary tightening depending on the strength of incoming data, a contrast to the dovish tilt globally as world economic momentum ebbs.

The Bank of Thailand raised its policy rate in December by a quarter point to 1.75 percent, the first increase since 2011.

https://www.bloomberg.com/news/articles/2019-04-04/bank-of-thailand-governor-says-financial-stability-risks-remain