Bank of Thailand Holds Key Rate as It Warns of Currency’s Gains
The Bank of Thailand left its benchmark interest rate unchanged for a fourth straight meeting, while at the same time downgrading its economic growth outlook and raising concerns about the strong currency.
The Monetary Policy Committee voted unanimously to hold its key rate at 1.75%, the central bank said in a statement on Wednesday, in line with almost all of the forecasts in a Bloomberg survey of economists.
- The central bank said it will monitor the exchange rate and capital inflows closely. The baht’s 2.9% gain against the dollar in the past three months — the most among emerging markets tracked by Bloomberg — is undermining the competitiveness of exports at a time of a trade slump
- The MPC now sees GDP growth at 3.3% in 2019, down from a previous forecast of 3.8%. It’s forecasting zero growth in exports, compared with an earlier projection of 3%
- Pressure is growing on policy makers to ease, with Deputy Prime Minister Somkid Jatusripitak saying hours before the rate decision that the Bank of Thailand will soon need to cut rates
- After delivering its first hike since 2011 in December, the Bank of Thailand has kept its key interest rate unchanged, concerned by still-high household debt and financial stability risks
- Regional central banks from India to New Zealand have cut interest rates in recent weeks to boost their economies amid an escalating U.S.-China trade war
- Inflation remains benign and has stayed within the central bank’s 1%-4% target range since March. The central bank left its inflation forecast for this year unchanged at 1%
- The baht pared earlier losses and was down 0.1% at 30.755 per dollar as of 2:26 p.m. in Bangkok.
— With assistance by Tomoko Sato, and Clarissa Batino