BOT Maintains Policy Rate And Growth Outlook

Economic Research	22 December 2016
Thailand
Economic Update
BOT Maintains Policy Rate And Growth Outlook The Bank of Thailand (BOT) monetary policy committee (MPC) unanimously voted to keep its benchmark lending rate (1-Day Bilateral Repurchase Rate) unchanged at 1.50% (see Figure 1), after observing that the economy had grown slightly quicker than expected, aided by temporary actors and government stimulus. As we expect Thailand’s GDP to grow modestly next year and with inflation expected to remain positive but manageable, we expect the Bank of Thailand (BOT) to maintain its key policy rate at its next meeting on 8 February and throughout the year. The MPC increased its 2016 GDP projection to 3.2%, from +3.1% previously, while maintaining its 2017 GDP forecast at 3.2%. It is assumed, higher public investment will offset softness in exports and private investments next year. However, forecasts for headline inflation are revised down for both 2016 (+0.3% YoY, from +0.6% previously) and 2017 (+2.0% YoY, from +2.2% previously), due to a slower-than-expected increase in recent oil price movements. Core inflation remains unchanged from the last assessment (2016F: +0.8%; 2017F: +1.0%). Economist:  Ng Kee Chou  | +603 9280 2179