FPO: Bank of Thailand feels pressure to cut rates

FPO: Bank of Thailand feels pressure to cut rates

The Federal Reserve's emergency rate cut will put pressure on the Bank of Thailand to follow in its footsteps, according to a senior official at the Fiscal Policy Office (FPO).

"If the Bank of Thailand finds the economy would grow at a slower pace than expected, it could be a factor encouraging the Monetary Policy Committee (MPC) to slash the policy rate," said Pisit Puapan, director of the FPO's Macroeconomic Policy Bureau.

The US central bank's rate cut indicates its concern about the Covid-19 outbreak, and other countries must seek ways to take care of their economies, he said.

The central bank's rate setters are set to meet on March 25 and several economists expected the MPC will further ease monetary policy to blunt the impacts of the pandemic after it cut the benchmark rate by 25 basis points to a record low of 1% last month.        

Mr Pisit said the Fed's surprise rate cut by a half percentage point weakens the US dollar against the baht, but the FPO estimated the stronger baht would be short-lived as the Covid-19 spread is still depressing the baht.

The baht has dipped 4.68% versus the greenback this year.

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