BoT cuts key rate to 0.50%

BoT cuts key rate to 0.50%

Titanun Mallikamas, secretary to the Monetary Policy Committee.
Titanun Mallikamas, secretary to the Monetary Policy Committee.

The Bank of Thailand cut its policy rate by 25 basis points to a record low of 0.50% on Wednesday, to help soften the economic impact of the pandemic and social distancing measures.

The central bank's Monetary Policy Committee (MPC) voted 4-3 at Wednesday's meeting to lower the one-day repurchase rate, with the three dissenters preferring a steady rate.

It was the fifth cut since August last year. The MPC had kept the rate steady at its last meeting after a 25-basis-point cut at an emergency meeting on March 20.

"The Thai economy is likely to contract at a deeper pace than previously predicted and the committee considered that the right relief measures, launched in a timely manner, will help cushion some impacts," MPC secretary Titanun Mallikamas said.

The economy is heading for recession after shrinking 1.8% year-on-year in the first quarter, the deepest contraction since the flood-hit fourth quarter of 2011.

The contraction has compelled the National Economic and Social Development Council, the state planning agency, to lower its economic forecast to minus 5-6% this year, down from 1.5-2.5% growth seen on Feb 17.

The central bank earlier warned that the economy would reach a nadir in the second quarter, before improving in the third and the fourth quarters.

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