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Thai central bank seen holding key rate at record low 0.50%: Reuters poll


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Thai central bank seen holding key rate at record low 0.50%: Reuters poll

By Orathai Sriring

 

2021-02-01T081226Z_1_LYNXMPEH1010T_RTROPTP_4_THAILAND-ECONOMY-CENBANK.JPG

FILE PHOTO: 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 is widely expected to leave its key rate unchanged at a record low on Wednesday, preserving its limited policy ammunition as the economy deals with its latest wave of coronavirus infections, a Reuters poll showed.

 

However, the impact from the coronavirus pandemic, a stubbornly strong baht and low inflation could pressure policymakers to further support Southeast Asia's second-largest economy, some analysts said.

 

Twelve economists surveyed expected the Bank of Thailand's (BOT) Monetary Policy Committee to hold its one-day repurchase rate steady at an all-time low of 0.50% at its first meeting of the year. Two predicted a 25 basis-point cut.

 

The key rate has been unchanged since the central bank cut rates three times between February-May 2020, when the COVID-19 crisis first hammered the economy.

 

Thailand had largely controlled the coronavirus by mid-2020 but a cluster linked to migrant workers in December has led to infections in most of its provinces. Economists worry the latest outbreak will deal another blow to consumption and its key tourism industry.

 

The BOT has said the policy rate is very low and liquidity is not a problem. It recently extended a debt restructuring period to help mitigate the pandemic's impact, while the government announced $7 billion in new stimulus to lift consumption.

 

"We have cancelled our call for a cut on the basis that the BOT is using targetted measures, such as personal loans and consumer credits," said Kobsidthi Silpachai, head of capital markets research of Kasikornbank.

 

He expects no policy change throughout 2021, unless there is a material unforeseen variable. "Expectations for herd immunity this year are still too high," he added.

 

Lattakit Lapudomkarn, economist at Kiatnakin Phatra Securities, expected a quarter-point cut this week because of the latest outbreak which was "an unexpected shock".

 

"If the MPC does not cut rates this time, there won't be any other appropriate time to do it," he said, adding recent government stimulus would not help much.

 

(Additional reporting by Satawasin Staporncharnchai; Editing by Jacqueline Wong)

 

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-- © Copyright Reuters 2021-02-01
 
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One of the major issues that the BOT face is the amount of Household Debt.

This has increased by slightly over 10% from 79% of GDP to 87% of GDP in just One year, and from 70% of GDP in 2012.

A lower key Rate means cheaper borrowing, and that is something the BOT has to reduce, as the Household Debt is starting to become a very real, and serious problem.

As Covid bites harder everywhere in the World, peoples potential to earn  Money is diminishing, and ability to repay their Loans decreases, and along with that goes the ever present threat of NPL increases.

Thailand does not stand alone with these problems, but other nations have more potential within their Populations to repay the loans 

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