BANGKOK- Thailand’s central bank is expected to leave its benchmark interest rate at a record low on Wednesday after two cuts this year, a Reuters poll showed, although it was likely to downgrade its growth outlook again.
All 16 economists in the poll predicted the Bank of Thailand’s (BOT) monetary policy committee (MPC) will keep its one-day repurchase rate at 1.25 percent, a record low last seen during the global financial crisis.
The rate was reduced by 25 basis points each in November and in August amid flagging growth, below-target inflation and a strong baht.
Last month, BOT Governor Veerathai Santiprabhob said the rate was already low and could not be cut much further, though his deputy, Mathee Supapongse, told Reuters there was still monetary policy room to help growth if needed.
“We expect the BOT to pause, as two previous rate cuts already took the policy rate to its record low of 1.25 percent, reflecting the BOT’s concerns about limited policy space,” said Charnon Boonnuch, an economist at Nomura in Singapore.
He said the BOT will resume cutting the rate in the first quarter of next year, as growth disappoints and inflation is still below the BOT’s 1-4 percent target range.
The inflation target will be narrowed for next year, according to Finance Minister Uttama Savanayana.
Tim Leelahaphan, an economist at Standard Chartered, said he expected the MPC to hold the rate in a unanimous vote and highlighted the need for low rates. – Reuters