Thursday, March 30, 2017

BOT Hikes GDP Forecast, Keeps Interest Rate At 1.5%

Economic Research
30 March 2017
Thailand

Economic Update




Bank of Thailand’s (BOT) monetary policy committee (MPC) unanimously voted to keep its benchmark lending rate (1-day bilateral repurchase rate) unchanged at 1.5%, after observing that the economic outlook improved on the back of a clearer recovery in merchandise exports, and returning tourists.
However, the MPC noted that the Thai economy still faced a plethora of external risks, including risks from US economic and foreign trade policies, financial stability concerns in China, political developments in Europe, and problems faced by the European banking sector.
The MPC also highlighted the following key domestic risks to economic growth:
    i.   Deterioration in loan quality in some business sectors;
   ii.   Under-pricing of risks due to the search-for-yield behaviour, following the prolonged low interest rate environment.

We maintain our forecast for Thailand’s GDP to grow 3.7% this year and with inflation expected to remain positive but manageable, we do not expect BOT to alter its key policy rate at its next meeting on 24 May and throughout the year.

Economist:  Ng Kee Chou  | +603 9280 2179

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