BOT maintains rate at 1.5%

[webfact]

BOT maintains rate at 1.5%
The Nation

BANGKOK: -- The Bank of Thailand today announced the decision to maintain the policy rate at 1.50 per cent.

Economists anticipated no change in the rate as the central bank’s Monetary Policy Committee convened today, following the cuts in the previous two meetings.

All seven MPC members unanimously decided to maintain the rate.

Source: http://www.nationmultimedia.com/breakingnews/BOT-maintains-rate-at-1-5-30262035.html


-- The Nation 2015-06-10

[webfact]

POLICY RATE
Rate maintained despite downside risks
The Nation

BANGKOK: -- The Bank of Thailand decided to maintain the policy rate at its meeting today, banking on the projected recovery in the economy in the latter months of the year despite some downside risks.

The Monetary Policy Committee today voted unanimously to maintain the policy rate at 1.50 per cent per annum. It cut the policy rate by 50 basis points in the previous two meetings, to bolster the economy which softened in the first four months of 2015 due to sluggish private consumption and continued contraction in exports. As Chinese and Asian economies' demand for Thai products dropped along with a shift in global trade structure, supporting the economy in the period was only increased disbursement of public investment expenditure and continued improvement in tourism.

"In the periods ahead, the economy is projected to improve gradually, but subject to downside risks from slower-than-expected recovery of the global economy, especially China and other Asian economies," said Mathee Supapongse, secretary of the MPC, at the press conference today.

The MPC in this meeting judged that the conduct of monetary policy has thus far eased monetary conditions, while the direction of exchange rate movement has become more conducive to the economic recovery. Nevertheless, the Thai economy remained subject to downside risks, particularly from the global economy. Therefore, monetary policy stance should continue to be accommodative in order to support the economic recovery.

The MPC also expected inflation to pick up in the second half as the base effect of high oil prices begins to wane, coupled with expected rises in oil and raw food prices. Meanwhile, core inflation was still positive but declined somewhat owing to subdued demand-side pressure. Nevertheless, in the Committee's assessment, the risk of deflation remains low, as consumption continues to increase, while the prices of most goods and services still increase or stay unchanged, and inflation expectations are close to the inflation target.

Source: http://www.nationmultimedia.com/business/Rate-maintained-despite-downside-risks-30262037.html


-- The Nation 2015-06-10

[Suradit69]

An Mizuho bank's economist's analysis of the decision and other economic/financial matters,

http://video.cnbc.com/gallery/?video=3000387226

[Srikcir]

BOT has cut 50 basis points within the last four months. It's still a long ways to go before the end of the third quarter.

With the Junta-government increasing the pace of borrowing funds from China and Japan for domestic infrastructure, continuing (ironically) expensive populist economic policies, failing to improve the agricultural industry profitability, and making poor foreign policy decisions regarding exports, I expect at least one more cut before end of year.

Thailand's economy is a long ways from recovery. And potential national DISUNITY on the draft 2015 constitution and lack of elections will further unsettle investor confidence.

[Cake Monster]

The MPC,s hands are tied on money base rates of 1.5% IMHO

The base rate dictates the lending rate of the Banks for all loans and mortgages, and with the private household debt at around 89% of GDP, and the number of NPL,s increasing, the Government has to rein in out of control spending by private households.

Debt amongst the SME sector has also started to raise concerns due to a rise in NPL,s., and financial institutions are starting to question the " quality " of debts Thai bank,s are holding.

Between a rock and a hard place for the MPC, as the Export sector is still not performing well, with continued contraction.

[NeverSure]

The MPC,s hands are tied on money base rates of 1.5% IMHO

The base rate dictates the lending rate of the Banks for all loans and mortgages, and with the private household debt at around 89% of GDP, and the number of NPL,s increasing, the Government has to rein in out of control spending by private households.

Debt amongst the SME sector has also started to raise concerns due to a rise in NPL,s., and financial institutions are starting to question the " quality " of debts Thai bank,s are holding.

Between a rock and a hard place for the MPC, as the Export sector is still not performing well, with continued contraction.

How does the policy rate "dictate the lending rate" of anything much less everything?

Would interest rates dictate that banks were required to make loans if they thought they might become non performing?

How would a 1/4 point of interest rate deter a household from buying a new TV on credit?

Inquiring minds want to know these things.