Thai central bank says needed to keep policy space for future risks - minutes

By Orathai Sriring

 

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

 

BANGKOK (Reuters) - Thailand's central bank saw a need to preserve monetary policy space to address possible future risks, when it kept its benchmark rate on hold last month, meeting minutes showed on Wednesday.

 

The Bank of Thailand (BOT) remains worried about the impact of the strength of the baht <THB=TH> on Southeast Asia's second-largest economy and will consider implementing additional measures as needed, according to minutes of its Sept. 25.

 

The baht is Asia's best performing currency so far this year, up 7.3% against the U.S. dollar, driven by Thailand's hefty current account surplus and fund inflows. It traded at 30.32 dollar at 0405 GMT, the highest in more than six years.

 

"The Committee remained concerned about baht appreciation against trading partner currencies given the economic slowdown prospects, as the economy could be more sensitive to greater currency appreciation," the minutes said.

 

"This would be an additional pressure on the softening domestic demand, particularly export-related manufacturing and services sectors".

 

BOT Governor Veerathai Santiprabhob told Reuters on Friday the central bank planned to further relax rules on fund outflows by the end of the year to help balance flows.

 

At the Sept. 25 meeting, policymakers left the policy rate <THCBIR=ECI> unchanged at 1.50% after August's surprise cut - its first since April 2015.

 

The central bank also downgraded its 2019 economic growth outlook to 2.8% from 3.3%. Last year's growth was 4.1%.

 

The next monetary policy review is on Nov. 6.

 

"The committee saw the need to preserve policy space in order to cushion against possible risks in the future and deemed it necessary to monitor the impact of the policy rate cut and fiscal stimulus measures on the economy," the minutes said.

 

Some committee members felt that "given the already accommodative monetary policy stance, the policy rate cut might not lend significant additional support to economic growth", compared with potentially increased financial stability risks.

 

While some financial system risks had been partly addressed by macroprudential measures, other risks to financial stability had not improved and warranted monitoring, the minutes said.

 

High and rising household leverage could lead to an accumulation of risks in the household sector, the minutes said.

 

Thailand's household debt accounted for 78.7% of gross domestic product at the end of June, among the highest in Asia.

 

For the full minutes https://www.bot.or.th/English/MonetaryPolicy/MonetPolicyComittee/ReportMPC/Minutes/MPC_Minutes_62019_y80li0x5.pdf

 

-- © Copyright Reuters 2019-10-09

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2 hours ago, snoop1130 said:

Thai central bank says needed to keep policy space for future risks

What risks? The PM has appointed himself as Chairman of the Economic Management Committee. The country is in safe hands thanks to his economic wizardry. What could go wrong!

I am preping for the global economic depression thats knockin on everyones door step.

Thailands situation is about to get a whole lot more dire. And not just thailand

 

6 hours ago, quadperfect said:

I am preping for the global economic depression thats knockin on everyones door step.

Thailands situation is about to get a whole lot more dire. And not just thailand

 

There are a few warning signs for sure... and if it happens Thailand sure will not be considered a safe haven!  At ~29/USD I think there will be a lot of issues, especially if we see a no-deal Brexit. 

14 hours ago, snoop1130 said:

monetary policy space to address possible future risks,

Like when farang ask for all their money back that has been parked here

16 hours ago, snoop1130 said:

 

The Bank of Thailand (BOT) remains worried about the impact of the strength of the baht <THB=TH> on Southeast Asia's second-largest economy and will consider implementing additional measures as needed, according to minutes of its Sept. 25.

Don't make me laugh, you decide how to play with the Baht, it's probably not yet time to re-evaluate it!
Some rich people have decided to prolong their speculation!

13 hours ago, Cadbury said:

What risks? The PM has appointed himself as Chairman of the Economic Management Committee. The country is in safe hands thanks to his economic wizardry. What could go wrong!

Expat men over 50 are also a risk now accordingly to a nameless minister!

4 hours ago, RichardColeman said:

Like when farang ask for all their money back that has been parked here

You mean the whole ha-loy?

Yes, it is of concern but many have short memories,

When I came to live in Thailand I was getting 14,8 Bht for an AUD