Thai Referendum: Steady as it Goes

5 August 2016

Rates & FX View

Thai Referendum: Steady as it Goes

Highlights

¨      Unanimous BoT decision to maintain benchmark policy rate at 1.50%; BoT reiterates preference to preserve policy space.

¨      Steady climb in headline CPI back to positive territory unlikely to drive any hawkish BoT inclination over the near term.

¨      Constitution Referendum scheduled on 7^th August; new Constitution contains prominent changes to selection of Senate and potentially, the Prime Minister.

¨      Challenging to gauge Referendum results at this juncture amid large majority of undecided voters.

¨      Regardless of Referendum results, expect the National Council for Peace and Order’s participation in the government to remain over the coming quarters which will ensure a smooth execution of the ongoing government stimulus measures and public investment infrastructure projects

¨      Retain cautious view on duration extension on ThaiGBs while strong BoT credibility and prudent foreign reserves management continue to underscore our neutral THB view.