Bank of Thailand Holds Interest Rate as Election Risks Mount

Suttinee Yuvejwattana
Bank of Thailand Holds Interest Rate as Election Risks Mount

(Bloomberg) -- The Bank of Thailand left its benchmark interest rate unchanged on Wednesday, as expected, providing policy stability to investors days before the nation’s first election since a military coup five years ago.

The Monetary Policy Committee voted unanimously to hold its policy rate at 1.75 percent, the Bank of Thailand said in a statement on Wednesday, in line with the forecasts from all 21 economists in a Bloomberg survey.

The MPC “viewed that the current accommodation monetary policy stance had contributed to the continuation of economic growth and was appropriate given the inflation target,” it said in a statement.

Key Insights

Thailand’s central bank hiked rates by 25 basis points in December, joining peers in the region in tightening monetary policy as U.S. rates rose. With the Federal Reserve now turning more cautious on rate hikes and inflation risks subsiding across Southeast Asia, central banks are adopting a wait-and-see approach on future movesWhile the MPC flagged the possibility of another interest-rate increase last month, policy makers are proceeding slowly. Don Nakornthab, a senior director at the BoT, said last week the shift away from policy tightening globally is making it more difficult for the central bank to hike rates, while an MPC member said in an interview the odds of another rate hike were lowInflation remains subdued at under 1 percent, below the central bank’s 1 percent to 4 percent target bandUncertainty about the outcome of the March 24 election is rising. Foreign investors have pulled out about a net $700 million from the nation’s stock and bond markets so far this year, while the benchmark SET index has underperformed peers in the Asia Pacific in that period

What Bloomberg’s Economists Say

“We continue to expect the BOT will leave interest rates unchanged until there is further clarity on U.S. trade policy, especially its stance on auto tariffs.”-- Tamara Henderson, economist covering Southeast Asia, Australia and New ZealandClick here to read the full report

Get More

The baht gained 2.6 percent against the dollar so far this year, the best performer in Asia, underpinned by the country’s large current account surplus and substantial reserve cushion. Going forward, the currency will be “volatile from both internal and external risks,” the central bank said, adding the MPC will monitor the foreign exchange situation and its impact on the economyPolicy decisions will remain “data dependent,” the BoT said. The MPC will “continue to monitor fragilities in the financial system,” it saidThe BoT lowered its economic growth projection for this year to 3.8 percent from 4 percent, and forecasts expansion of 3.9 percent in 2020; it also lowered estimates for core inflation to 0.8 percent from 0.9 percent

(Updates with details from central bank starting in third paragraph.)

To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at

To contact the editors responsible for this story: Sunil Jagtiani at, Nasreen Seria

For more articles like this, please visit us at

©2019 Bloomberg L.P.