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  1. #1
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    Lower Baht Interest Rate?

    Thai central bank seen cutting key rate to help economy in recession
    By Orathai Sriring


    FILE PHOTO: The Bank of Thailand logo is seen in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva/File Photo

    BANGKOK (Reuters) - Thailand’s central bank is widely expected to cut its benchmark interest rate to a new low at its policy review on Wednesday to cushion the economy from the impact of the coronavirus outbreak.

    Sixteen of 18 economists in the poll predicted the Bank of Thailand’s (BOT) monetary policy committee would cut its one-day repurchase rate THCBIR=ECI by 25 basis points to 0.50% - which will be the fifth reduction in borrowing costs since August.

    The other two economists forecast the central bank would keep the rate at 0.75%, the lowest on record.

    The BOT left the rate unchanged at its March 25 meeting after cutting it by a quarter point at a special meeting on March 20, saying the effects of the pandemic would be more severe than previously expected.

    On Monday, Thailand reported its economy contracted 1.8% in the first quarter from a year earlier, and 2.2% from the December quarter, as social restrictions to halt the spread of the pandemic hit tourism and domestic activity.

    The National Economic and Social Development Council (NESDC), which complies GDP data, slashed its 2020 GDP outlook to a 5.0-6.0% contraction from growth of 1.5-2.5% seen earlier, with exports expected to fall 8%.

    In March, the BOT forecast the economy would shrink 5.3% this year, the deepest contraction since the 1997-98 Asian financial crisis.

    “We continue to look for another easing of 25 bps in this meeting,” said Kobsidthi Silpachai, head of capital markets research at Kasikornbank.

    “The NESDC forecasts are painting that the economic outlook will get worse before it gets better,” he added.

    Tim Leelahaphan, economist at Standard Chartered Bank, predicts a quarter point cut this week and a similar reduction in the third quarter.

    But some think policymakers may want to wait to assess the effects of government and central bank steps introduced to mitigate the impact of the virus, which had also prompted banks to cut their lending rates.

    “We think the policy rate could go lower this year, but it may not be at this time,” said Phacharaphot Nugtramas, economist at Krung Thai Bank.

    Thailand has reported 3,031 confirmed cases and 56 deaths since the outbreak started in the country in January.

    The government on Sunday opened malls and department stores for the first time since March in its second phase of relaxing measures as the number of coronavirus cases slowed.

    Majestically enthroned amid the vulgar herd

  2. #2
    Thailand Expat jabir's Avatar
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    Can't speak for LoS but I expect UK to join the negative interest club by eoy, should be fun to watch.

  3. #3
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    Quote Originally Posted by jabir View Post
    Can't speak for LoS but I expect UK to join the negative interest club by eoy, should be fun to watch.
    ...when does eoy arrive?...

  4. #4
    Thailand Expat jabir's Avatar
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    end of year

  5. #5
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    Quote Originally Posted by jabir View Post
    end of year
    ...calendar or fiscal?...

  6. #6
    Thailand Expat jabir's Avatar
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    up to you, or whichever comes first

  7. #7
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    Quote Originally Posted by jabir View Post
    up to you, or whichever comes first
    ...*cough*...the subject is the Bank of England...

  8. #8
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    Bank of Thailand to Inch Toward Lower Bound: Decision Day Guide

    By Michelle Jamrisko and Suttinee Yuvejwattana
    May 20, 2020, 4:00 AM GMT+7
    https://www.bloomberg.com/asia


    • Most economists surveyed by Bloomberg predict a 25bps cut
    • Central bank may need to consider unconventional policy steps


    The Bank of Thailand is set to push its benchmark interest rate even closer to the lower bound as it tries to rescue an economy that just posted its worst quarterly contraction in more than eight years.

    All but three of the 24 economists in a Bloomberg survey see the central bank cutting the policy rate by 25 basis points to 0.5%. That would add to two earlier reductions of the same magnitude, in February and March.

    With little room to cut the benchmark rate further, policy makers may need to consider using new tools to add to the fiscal stimulus and liquidity measures already deployed. Thailand’s tourism and trade-reliant economy is taking a severe knock from the coronavirus pandemic, with officials predicting it will shrink 5%-6% this year.




    Here’s what to watch for in the policy decision:
    Rate Cuts

    With inflation now in negative territory, Thailand’s real interest rate stands at 3.74%, among the highest in the world, giving the central bank scope to ease.
    At the same time, cutting the rate to 0.5% would leave the Bank of Thailand little space to operate, given that a rate of about 0.23% can be considered the central bank’s effective lower bound, according to comments last month from Don Nakornthab, a senior director in the economic and policy department.

    “The headroom for rate reductions is narrowing, which is likely to prod the BOT to consider unconventional moves, including asset purchases,” said Radhika Rao, an economist at DBS Group Holdings Ltd. in Singapore.

    Growth Pummeled


    Growth concerns have taken center stage for the Bank of Thailand, with GDP shrinking 1.8% in the first quarter for the first contraction since 2014, according to a government report earlier this week. The tourism sector, which normally accounts for about one-fifth of the economy, has been under particular pressure, with lingering uncertainty on when and how the government will re-open its doors to international visitors.

    While the government has started easing some lockdown restrictions, the slowdown is broadly expected to worsen before it gets better. The state of emergency remains a weight on business and consumer activity and global demand remains depressed.

    “The pandemic’s impact has been material across the globe, including Thailand’s key trade and tourism partners, dampening prospects of a quick external-led turnaround,” said Rao.

    Other Tools


    The Bank of Thailand has signaled that its toolbox is deep enough to not have to rely on interest rates as a primary mechanism for the economy’s big challenges. Don last month mentioned The Bank of Thailand is studying options such as a large-scale asset purchase program and some form of yield-curve control, if that becomes necessary.

    “We do not expect aggressive rate cuts from the BoT given its limited policy room,” said Tim Leelahaphan, an economist at Standard Chartered Plc in Bangkok. Still, the impact of unconventional measures implemented thus far to stabilize the bond market “remains unclear,” he said.

  9. #9
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    decision day,2.30pm.anyone doing a money transfer to thailand these past few days will soon find out the exchange rate they will get.and it wont be what they expect.
    savers beware.

  10. #10
    Thailand Expat jabir's Avatar
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    Quote Originally Posted by tomcat View Post
    ...*cough*...the subject is the Bank of England...
    and interest rates

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