Thai central bank seen holding key rate on May 8 as growth slows, risks rise - Reuters poll

[webfact]

Thai central bank seen holding key rate on May 8 as growth slows, risks rise - Reuters poll

By Orathai Sriring

 

FILE PHOTO: Thailand's central bank is seen at the Bank of Thailand in Bangkok,Thailand in this April 26, 2016 file photo. REUTERS/Jorge Silva/File Photo

 

BANGKOK (Reuters) - Thailand's central bank is expected to keep its benchmark policy rate steady on Wednesday for a third meeting after tightening in December, a Reuters poll showed, to support a slowing economy while inflation remains benign.

 

All 19 economists in the survey predicted the Bank of Thailand (BOT)'s monetary policy committee (MPC) will keep its one-day repurchase rate at 1.75 percent, half a point above the record low.

 

The rate was raised by 25 basis points in December, the first hike since 2011, in a bid to curb risks to financial stability.

 

BOT Governor Veerathai Santiprabhob told Reuters last month the central bank can afford to take a wait-and-see stance on monetary policy, though he noted the door for a possible rate hike in future has not been closed yet.

 

Sarun Sunansathaporn, economist of Bank of Ayudhya, sees no policy change for the rest of 2019.

 

"Softer economic momentum and steady, modest inflation, will take any rate hikes off the table at the May 8 MPC meeting," he said.

 

Annual headline inflation was 1.23 percent in April, near the low end of the BOT's 1-4 percent target range..

 

In March, the MPC unanimously voted to hold the policy rate.

 

It also cut its 2019 economic growth forecast to 3.8 percent from 4.0 percent as exports sag. Last week, a central bank official said Southeast Asia's second-largest economy could grow less than forecast.

 

MURKY ENVIRONMENT

Thailand's economy also faces political risks at home as the outcome of a March 24 election is unclear until after official results are due next week. Last year's economic growth was 4.1 percent, the best in six years.

 

"No change expected for the policy rate. Both external and internal environment are murky. It's like driving when there is fog... best to drive slow and be patient," said Kobsidthi Silpachai, head of capital markets research at Kasikornbank.

 

Twelve of 16 analysts who gave a medium-term view said they expected no monetary policy change throughout 2019, while four analysts predicted a hike in the second half.

 

The BOT's "persistent hawkish tone keeps us from expecting policy support with a rate cut this year", said Prakash Sakpal of ING in Singapore.

 

However, Tim Leelahaphan, economist of Standard Chartered, said Thailand's economy appears resilient. "We continue to expect the BOT to swim against the tide of global monetary policy in H2 and hike rates by 25 bps to contain risks to domestic financial stability," he said.

 

Graphic: Thai policy rate, GDP and CPI (https://tmsnrt.rs/2LjRDjR)

 

(Additional reporting by Satawasin Staporncharnchai in BANGKOK Editing by Richard Borsuk)

 

-- © Copyright Reuters 2019-05-03

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[Srikcir]

19 hours ago, webfact said:

Last year's economic growth was 4.1 percent, the best in six years.

Already forecast not to repeat this year with the latest forecast of 3.6% and downward trend for export value.

So in one year the government lost its best economic growth in six years. That's a very painful 'success.'