Cracks appear in consensus on rate

Cracks appear in consensus on rate

Standard Chartered says the Bank of Thailand could tighten twice in the second half

Tim: MPC may spring a September surprise
Tim: MPC may spring a September surprise

Despite the consensus view anticipating an unchanged policy interest rate throughout 2018...

Several domestic economic figures will be released before the Monetary Policy Committee (MPC) meeting scheduled for Sept 19, said economist Tim Leelahaphan.

"Our different view is to note that investors should keep an eye on the MPC meeting in the next two months," Mr Tim said. "It might be a good time [to raise the policy rate], as the weakening baht and yuan will benefit from a rate hike and exports will not be affected much."

Thailand's policy interest rate might be raised by 25 basis points on two occasions in September and December, he said.

"A clear shift in the central bank's stance towards monetary policy tightening supports our call, with the release of inflation and second-quarter GDP data ahead of September's MPC meeting deemed crucial," Mr Tim said.

In its minutes released on July 4, the MPC said: "The committee viewed that, should economic expansion continue and inflation move more firmly within target, the need for currently extra accommodative monetary policy would start to be reduced, and that the need for a policy rate increase in order to build policy space in the future would be increasing."

The MPC on June 20 voted 5 to 1 to stand pat on the policy rate at 1.5%, where it has remained since a 25-basis-point cut in April 2015.

The panel said the accommodative stance would support the country's economic recovery, which remains uneven in some sectors and has yet to reach low-income earners and farmers in particular.

The 1.5% level is lower than the US Federal Reserve's range of 1.75-2% for a key rate.

One MPC member voted to raise the policy rate by a quarter point to 1.75%, arguing that the economic expansion was sufficiently robust and that implementing monetary accommodation for an extended period might induce households and businesses to underestimate potential changes in financial conditions.

Thailand is among the few countries still shunning normalisation of monetary policy. Some Asean central banks have synchronised their monetary policies with the Fed's.

Thailand's GDP, meanwhile, is projected to expand by 4.3% this year, with global economic growth anticipated at 4%, according to Standard Chartered Bank Thai.

Do you like the content of this article?

Lebanon, Israel announce talks on disputed borders

BEIRUT - Lebanon and Israel said Thursday they will hold US-brokered negotiations on their disputed land and maritime borders, the first talks in decades between two countries technically still at war.

1 Oct 2020

Justice sought

A Chiang Mai MP candidate disqualified by the Election Commission for election fraud says he will ask it to give him his MP status and pay him 70 million baht in damages after a court ruled him not guilty.

1 Oct 2020

New team

Sompong Amornvivat is re-elected as Pheu Thai party leader as the largest party gets new executive board consisting of many people allegedly close to the Shinawatra family.

1 Oct 2020