Thailand: Central Bank keeps policy rate unchanged in November
At its 10 November meeting, the Monetary Policy Committee of the Bank of Thailand (BoT) held the policy rate at the record low of 0.50% for the 12th consecutive meeting. The decision was unanimous across the Committee and was widely expected by market analysts.
The Bank’s decision came amid an improving pandemic situation and easing restrictions, which should reduce downward pressure on the economy. As such, the Bank maintained its upbeat tone from its previous statement, noting that the economy had “entered the recovery phase following the relaxation of containment measures and the re-opening of the country” and that “downside risks to the economic projection decreased on account of the accelerated vaccination progress”. Nevertheless, the Bank highlighted that uncertainty remains high, thus justifying its decision to maintain its accommodative monetary policy stance.
In its communiqué, the Bank kept its forward guidance relatively unchanged, continuing to emphasize supporting the economic recovery and indicating that it would “stand ready to use additional appropriate monetary policy tools if necessary”. The majority of our panelists see the Bank holding rates steady until year-end, while some see rates rising towards the end of 2022.
However, Krystal Tan, economist at ANZ, does not expect rates to increase this year or next, commenting:
“There is little chance that the BoT will normalise policy settings any time soon, given the still nascent and fragile recovery, in our view. Notably, the BoT reiterated that its focus is on the economy’s recovery. […] Overall, with demand-side price pressures benign and output unlikely to return to its pre-pandemic size until late 2022, we do not expect the Central Bank to withdraw policy accommodation any time soon. Our baseline scenario is still for the first hike to materialize only in 2023.”
The next monetary policy meeting is scheduled for 22 December.