Thai central bank says has not closed door to further easing

 

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

 

BANGKOK (Reuters) - Thailand's central bank has not shut the door to further monetary policy easing, a deputy governor said, after cutting the key rate three times this year to a record low of 0.5% to support an economy badly hit by the coronavirus outbreak.

 

The Bank of Thailand has forecast Southeast Asia's second-largest economy will shrink a record 8.1% this year.

 

The interest rate direction will depend on the consideration of the monetary policy committee (MPC), Mathee Supapongse said in a recorded interview with television channel INN, aired on Monday.

 

"It has not closed the door yet... but further policy easing will have both good and bad effects, so it must weigh that well," Mathee said of the committee, of which he is also a member.

 

Also, the BOT has absorbed large liquidity in the system, worth trillions of baht, which can be released back, he said.

 

Mathee said economic indicators had improved in June and an economic recovery in the second half would be mainly driven by domestic spending.

 

The MPC will next review monetary policy on Aug. 5.

 

(Reporting by Orathai Sriring and Kitphong Thaichareon; Editing by Martin Petty)

 

-- © Copyright Reuters 2020-07-07

 

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13 minutes ago, webfact said:

Mathee said economic indicators had improved in June and an economic recovery in the second half would be mainly driven by domestic spending.

Think they fail to realise that Thai domestic spending comes from the wallets of many people employed in the tourism business who currently have no money as there's no tourists opening their wallets

1 hour ago, RichardColeman said:

Think they fail to realise that Thai domestic spending comes from the wallets of many people employed in the tourism business who currently have no money as there's no tourists opening their wallets

You are saying that all domestic spending is derived from less than 20% of GDP which is clearly not the case, if tourism were 90% of GDP I might agree, but it isn't.

I don’t understand BoT’s strategy, unless they merely hope to talk the Baht down.  So far, we all know how well that has worked...

Easing will not stimulate anything the difference between 1/2 of a percent and 1/4 of 1 percent will not generate business spending or investment the government needs to spend some of the trillions they have to support the people and business to grow the economy

 

1 hour ago, Isaan sailor said:

I don’t understand BoT’s strategy, unless they merely hope to talk the Baht down.  So far, we all know how well that has worked...

You must be being paid to repeat these same lines over and over and over again. It's been explained to you many times that this is a USD issue and at times you seem to acknowledge that yet you still fall back to bashing BOT and the Baht....why is that, what's your motive, are you being paid or do you just suffer from repetitive or obsessive syndrome? Seriously, I really would like to know, I actually counted how many times you posted a similar sort of comment and I stopped counting your posts at 63!

Edited July 7, 20206 yr by Trillian

I feel central bankers anywhere in the world are just as clueless. There doesn't seem to be any original thought anywhere. The solution of every bank in all countries in the world seem to be "quantitative easing" and it hasn't helped anyone but the richest people that have seen their stock values grow. 

I understand @Trillian's post, regarding this being a USD issue. Transnational purchases of materials and commodities must occur in USD. Either way, its particularly tricky for Thailand right now, IMO. Easing allows for more liquidity, but puts the baht in peril with respect to its stability as a currency. Stability in the Thai baht is a key factor in attracting and retaining foreign investment here so... I haven't searched for an answer to this but... has the BoT made mention of a target they want to achieve and maintain regarding the strength of the Thai baht? Will easing only be seen in the form of lower interest rate loans to large corps? 

13 minutes ago, PiMi said:

I understand @Trillian's post, regarding this being a USD issue. Transnational purchases of materials and commodities must occur in USD. Either way, its particularly tricky for Thailand right now, IMO. Easing allows for more liquidity, but puts the baht in peril with respect to its stability as a currency. Stability in the Thai baht is a key factor in attracting and retaining foreign investment here so... I haven't searched for an answer to this but... has the BoT made mention of a target they want to achieve and maintain regarding the strength of the Thai baht? Will easing only be seen in the form of lower interest rate loans to large corps? 

Most of your questions get answered here:

 

 

On 7/7/2020 at 5:12 AM, Trillian said:

You are saying that all domestic spending is derived from less than 20% of GDP which is clearly not the case, if tourism were 90% of GDP I might agree, but it isn't.

Tourism may be around 17% of GDP, but it is a huge source of employment, legitimate, or otherwise, on the books, and off the books.  That's millions of people unemployed in the tourism sector.  That doesn't help the circulation of domestic spending.