Thai central bank seen holding key rate steady, likely to cut GDP forecast - Reuters poll

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

 

By Orathai Sriring

 

BANGKOK (Reuters) - Thailand's central bank is expected to maintain policy for a 10th straight month and leave its key rate at a record low, but will likely cut its outlook for economic growth when it meets on Wednesday, a Reuters poll showed.

 

The Bank of Thailand's current forecast for GDP in 2021 calls for 3.2% growth but Governor Sethaput Suthiwartnarueput said last month that growth could be in the "upper 2% levels".

 

A second wave of coronavirus outbreaks in December has hampered an economic recovery and the Finance ministry in January cut its GDP forecast to 2.8% growth from 4.5%.

 

With few policy tools left at its disposal, all 14 economists surveyed believe the central bank's Monetary Policy Committee will hold its one-day repurchase rate at 0.50%.

 

The rate has been unchanged since three reductions between February-May 2020, when the COVID-19 pandemic first devastated the tourism-reliant economy.

 

Thailand has, however, largely contained the second wave of infections and has eased restrictions to boost domestic activity while preparing to gradually reopen to foreign visitors.

 

Takit Chartchredsak, an economist at Asia Plus Securities, now expects no policy change throughout 2021, revising his previous view that there could be one more rate cut in the second quarter.

 

"We see the economy is improving quickly as the lockdown was relaxed sooner than expected. But the recovery will still take time," he said.

 

A recent weaker baht should also help exports, another key driver of Thailand's economy.

 

Tim Leelahaphan, an economist at Standard Chartered, noted that the rate was already close to zero, adding that "the effectiveness of previous rate cuts in boosting the economy is unclear."

 

At its last meeting, the BOT said the outlook for the economy remained highly uncertain and what limited policy options it had should be used at the most effective time.

 

(Reporting by Orathai Sriring; Additional reporting by Satawasin Staporncharnchai; Editing by Edwina Gibbs)

 

-- © Copyright Reuters 2021-03-22

 

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[RichardColeman]

So within the first 3 months of this year predicted growth by the experts (finger in the wind time) has gone from 4.5% to 3.2%, to now upper 2%'s. 

 

I think they should stay at 0.5% and be done with it

[1Gringo]

so long as the exchange rate improves, I'm happy with the BOT.

[Berkshire]

On 3/23/2021 at 10:00 AM, 1Gringo said:

so long as the exchange rate improves, I'm happy with the BOT.

USD over 31 now.  Thank you President Biden....5555

[Leaver]

On 3/22/2021 at 2:40 PM, RichardColeman said:

I think they should stay at 0.5% and be done with it

 

That would be a loss of face.  Can't let the fact get in the way of keeping face.  ????

[spidermike007]

With the Fed level at 0.5%, how on earth are the banks here able to get away with the kind of interest rates, that they charge on loans? Is it even "legal"? It seems extortionate. Is there no federal regulation of lending practices here? It is totally out of proportion to the record low rates found in the US and Europe at this time. 

 

https://www.statista.com/statistics/615037/mortgage-interest-rate-europe/

 

Edited March 26, 2021 by spidermike007