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Bank of Thailand likely to keep rate at 1.5% for rest of year

PHATRA Securities expects the Bank of Thailand’s rate-setting committee to keep its benchmark rate at 1.5 per cent when it meets today, and likely hold that mark for the rest of the year.

Pipat Luengnaruemitchai, assistant managing director at Phatra Securities, said the current policy rate remains an accommodative fit for the needs of Thai economic growth and the country has a large surplus in its current account. There are no signs of concern for inflation, Pipat added.

However, if the economic recovery firmed up later this year and the US Federal Reserve raised its benchmark rate two or three times this year, as expected, the BOT’s Monetary Policy Committee (MPC) would be likely to follow suit, Pipat said.

He said that, assuming the MPC held fire on any rate rise, capital could flee the country. Any decision by the MPC to raise rates would hinge on a number of factors, particularly Thailand’s economic fundamentals, Pipat said.

For the baht, Pipat said the currency may strengthen to 34 to the US dollar in the short term, arising from likely foreign capital inflows into stocks and short-term bonds in emerging markets.

Source: www.nationmultimedia.com

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Joe Miller
the authorJoe Miller
Born in Europe, raised in Australia, I have been living in Thailand for over 20 years and witnessed the many changes the country has undergone since the Asian Financial Crisis. I have spent time in Phuket, Samui, Hua Hin, and Chiang Mai, but when all is said and done I gravitate back to Bangkok. It is here that I spent years teaching at universities and running a software development company. These days I live on the Internet with Bangkok as my base. I never stopped believing in the enormous potential of the kingdom of Thailand, which is why I joined the ThaiVest Team.

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