Thailand Holds Rate, With Economy Seen Contracting 5.3% (Bloomberg)
Last Modified: 03:47 AM, Wed Mar 25, 2020

Suttinee Yuvejwattana

Bloomberg. 25 March 2020

Word Count: 313

The Bank of Thailand left its benchmark interest rate unchanged after an emergency cut last week, while projecting a sharp contraction in the economy this year because of the coronavirus outbreak. The policy rate was maintained at 0.75% today following a 25 basis-point reduction to a record low at an unscheduled meeting March 20. Four of the seven monetary policy committee members voted to hold, two called for a cut and one wasn't able to attend. The bank slashed its growth projection for this year to a contraction of 5.3% from an earlier expectation of 2.8% expansion. Exports and tourism have both been hard hit as the outbreak spreads around the world. Assistant Governor Titanun Mallikamas said the MPC stands ready to lower rates further if needed and will keep a close watch on markets, including the baht exchange rate. The economy would contract "significantly" amid the blow from the pandemic, recovering only in 2021 if the outbreak moderates, Mallikamas said.

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(Bloomberg) -- The Bank of Thailand left its benchmark interest rate unchanged after an emergency cut last week, while projecting a sharp contraction in the economy this year because of the coronavirus outbreak.

The policy rate was maintained at 0.75% Wednesday following a 25 basis-point reduction to a record low at an unscheduled meeting March 20. Four of the seven monetary policy committee members voted to hold, two called for a cut and one wasn’t able to attend.

The bank slashed its growth projection for this year to a contraction of 5.3% from an earlier expectation of 2.8% expansion. Exports and tourism, the key drivers of Thailand’s economy, have both been hard hit as the outbreak spreads around the world.

Assistant Governor Titanun Mallikamas said the MPC stands ready to lower rates further if needed and will keep a close watch on markets, including the baht exchange rate.

The economy would contract “significantly” amid the blow from the pandemic, recovering only in 2021 if the outbreak moderates, Mallikamas said in a statement delivered through the Bank of Thailand’s Facebook page.

The Thai baht dropped 0.3% against the dollar as of 2:33 p.m. in Bangkok, while the benchmark stock index extended gains to 4.8%.

Eight of 17 analysts in a Bloomberg survey predicted the rate decision, with the rest expecting a quarter-point reduction.

Central bankers around the world are accelerating efforts to support the economy by slashing interest rates and boosting liquidity. With inflation-adjusted interest rates in Thailand close to zero and the Bank of Thailand close to what officials see as the effective lower bound of its benchmark rate, policy options are becoming limited.

The prime minister has declared a month-long state of emergency starting Thursday, with Bangkok already under partial shutdown since Sunday. On Tuesday the government approved a stimulus package worth about $3.6 billion, including $1.37 billion in cash handouts to some workers.

(Updates with economic contraction in first paragraph)

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