Central bank’s interest rate cut a case of ‘too little, too late’

By The Nation

 

Amornthep Chawala, head of research at CIMB Thai says central bank's rate cut is too small and too late.

 

The interest rate cut by the central bank on Wednesday is too little and too late, according to one analyst, while another analyst forecast that it will be the last cut for this year.

 

Amornthep Chawala, head of research at CIMB Thai, said the Bank of Thailand (BOT)’s decision to cut the key interest rate to 1.25 per cent, the lowest rate since 2009, was a reflection of the worry among members of the BOT’s Monetary Policy Committee (MPC).

 

Thailand’s economic growth has been affected by the global trade war, which has caused a contraction in exports, as well as a slowdown in household consumption and private investment.

 

His comments came after five out of the seven MPC members voted to cut the policy interest rate on Wednesday (November 6). With the government yet to accelerate public investment, the central bank has had to step in and provide support to the economy.

 

“But the [rate] cut is too small and too late. We have to wait and see whether it can save the Thai economy, which has slowed down significantly,” he cautioned.

 

Meanwhile, Krungsri Bank said that the cut was expected to be the last one for this year.

 

The rate cut by 25 basis points to 1.25 per cent marks a historic low for the key policy rate, Krungsri Bank said on Wednesday.

 

The baht is the currency that has strengthened the most in the Asian region, appreciating by around 7 per cent since early this year, the bank said.

 

The baht reacted immediately to the rate cut, weakening to around Bt30.40 per dollar, said the bank.

 

The MPC cited economic slowdown exceeding expectations as justification for the cut. The MPC will meet again on December 18, but they are expected to maintain the rate at 1.25 per cent for the rest of this year, the bank said.

 

Source: https://www.nationthailand.com/business/30378128

 

-- © Copyright The Nation Thailand 2019-11-07

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So the Chinese saw it coming and moved their cash to Thailand? That game isn't over yet! And the euro/baht is the same as before the interest rate cut now...so they need a better plan or the thai export goes down the drain.

12 minutes ago, Youlike said:

So the Chinese saw it coming and moved their cash to Thailand? That game isn't over yet! And the euro/baht is the same as before the interest rate cut now...so they need a better plan or the thai export goes down the drain.

Euro/baht is of no consequence in this, the name of the game is to weaken the Baht, slow down capital inflows and cut the trade surplus. Exports are a long way away from going down the pan, exports still oustrip imports by a fair margin. 

This all seems more about ego and face, than economics...

Just now, mok199 said:

We've only just begun...

Carpenters, 1970, am I right?

Thailand is the hub of "too little, too late"!

 

 

Exports are suffering especially rice. Not a day goes by without news of a large manufacturer closing or laying of staff...this all trickles down to domestic spending...of course its the global slowdown in other economies that is to blame...its the high baht...simple...and why if the Thai economy is slowing dosnt he include that in the "global slowdown" when its cheaper to buy goods or holiday in Western countries why would anybody even look at Thailand. They need to understand their level on the ladder and how people view Thailand....its not as a Rivera....people came for cheap sex, beer, and cheap fake goods

They are still in denial, surely a teflon economy can't tarnish...?

1 hour ago, saengd said:

Euro/baht is of no consequence in this, the name of the game is to weaken the Baht, slow down capital inflows and cut the trade surplus. Exports are a long way away from going down the pan, exports still oustrip imports by a fair margin. 

If the chinese move huge amounts of money to be parked in Thailand (in condo's or whatever) it sure strenthens the Baht. And the euro/pound will sure see it...

6 minutes ago, Youlike said:

If the chinese move huge amounts of money to be parked in Thailand (in condo's or whatever) it sure strenthens the Baht. And the euro/pound will sure see it...

Selling RMB and buying THB has no impact on THB/EUR, selling USD or EUR would

The rice in my local supermarket used to be Thai now from Pakistan.

40 minutes ago, heybuz said:

The rice in my local supermarket used to be Thai now from Pakistan.

For those or the one that doesn't get it in my home country, sorry for the confusion

It has made absolutely no difference to the exchange rates which are going down still . The AUS RBA has just reduced their rate by 25 basis points and gone up against the US$ but down against the baht .

Just as a very anti-Keynes exemple : Thailand is the world's number one rice esporter ; however, in may country (Portugal) a kg of rice costs much less than it does in a Thai supermarket. Does it make sense ? I'll leave it to you  ????

 

10 minutes ago, Dr Rodrigues Pereira said:

Just as a very anti-Keynes exemple : Thailand is the world's number one rice esporter ; however, in may country (Portugal) a kg of rice costs much less than it does in a Thai supermarket. Does it make sense ? I'll leave it to you  ????

 

 

Exporting to whom, does exporting the thai rice give larger profits than selling in the country

 

Agreed, too little, too late.  Baht always in world news--as the most overpriced, manipulated currency.  And those of us living here, pass the word to friends in homeland.  So let exports and western tourism die---they deserve it.

7 hours ago, webfact said:

The baht reacted immediately to the rate cut, weakening to around Bt30.40 per dollar, said the bank.

And immediately thereafter strengthened again. Right now at 30.33

2 hours ago, Dr Rodrigues Pereira said:

Just as a very anti-Keynes exemple : Thailand is the world's number one rice esporter ; however, in may country (Portugal) a kg of rice costs much less than it does in a Thai supermarket. Does it make sense ? I'll leave it to you  ????

 

Is that Thai rice or another source?