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BANGKOK 21 July 2019 01:43
Jonathan Fairfield

Thai central bank holds key rate, slashes growth and export outlook again

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Thai central bank holds key rate, slashes growth and export outlook again

By Orathai Sriring and Kitiphong Thaichareon

 

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BANGKOK, June 26 (Reuters) - Thailand's central bank cut its forecasts for 2019 economic growth and exports for the third time in six months on Wednesday, but held its benchmark interest rate steady, saying monetary policy remains appropriate.

 

The Bank of Thailand (BOT), in a unanimous vote, left the one-day repurchase rate at 1.75 percent for a fourth straight meeting, after hiking it in December for the first time since 2011.

 

The BOT said it would keep closely monitoring fund inflows.

 

All but one of the 15 economists polled by Reuters had predicted no policy change; one had forecast a quarter-point cut.

Titanun Mallikamas, monetary policy committee secretary, said the central bank's policy stance "is neutral and will be data dependent going forward".

 

Given slowing growth, "pressure is likely to mount on the central bank to loosen policy," Capital Economics said.

 

But in its view, a cut this year will be resisted, as the BOT "has repeatedly raised concerns about the risks of lower interest rates for financial stability."

 

While faltering growth, low inflation and a strong baht should support policy easing, the BOT has reiterated concerns about financial stability risks and stubbornly high household debt.

 

The baht is hovering around a six-year high. It has appreciated about 5.5% against the U.S. dollar this year, with much of the gain coming recently.

 

Titanun said the central bank will tighten its management mechanism of the baht and has already "taken care" of the baht to some extent.

 

The central bank has instruments ready to handle the baht' strength, which may be introduced "before long", he said.

 

ZERO EXPORT GROWTH

 

Deputy Prime Minister Somkid Jatusripitak said on Wednesday that while the strong baht is hurting exports, intervention is not possible because of United States monitoring of such moves.

 

He said the central bank might cut interest rates this year as it "may not be able to resist the trend... But it's an independent agency, so we can't interfere with its decisions. But I think it would definitely cut."

 

The BOT cut its 2019 growth forecast for a third time in six months to 3.3% from 3.8% seen in March. It also trimmed its 2020 GDP growth forecast to 3.7% from 3.9%.

 

Exports, a key driver of economic growth, are expected to have zero growth this year, compared to a previous forecast of a 3.0% increase.

 

The central bank maintained its 2019 headline inflation projection of 1.0%.

 

Domestic political uncertainty remains after a March election, as junta chief-turned-civilian prime minister Prayuth Chan-ocha will lead a fragile coalition. His cabinet line-up is expected to be announced by July.

 

The BOT said tourism would grow at a lower rate relative to the previous assessment due mainly to Chinese tourist figures. It now predicts 39.9 million tourists this year, from 40.4 million projected earlier.

 

The central bank said public expenditure would grow at a slower pace than previously due to an expected delay in the next budget.

 

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-- © Copyright Reuters 2019-06-27
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39 minutes ago, Jonathan Fairfield said:

ZERO EXPORT GROWTH

 

Deputy Prime Minister Somkid Jatusripitak said on Wednesday that while the strong baht is hurting exports, intervention is not possible because of United States monitoring of such moves.

Seems they got themselves in a little pickle.

 

Too bad the economy relies on cheap, low-skilled labor.

 

Time to stop holding your arrogant noses in the air and get to work growing up as a country and learning to compete like the rest of us.

 

No time for "sanuk" or other frivolous, superficial nonsense.

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28 minutes ago, Fex Bluse said:

Seems they got themselves in a little pickle.

 

Too bad the economy relies on cheap, low-skilled labor.

 

Time to stop holding your arrogant noses in the air and get to work growing up as a country and learning to compete like the rest of us.

 

No time for "sanuk" or other frivolous, superficial nonsense.


When you're a turkey, you can't soar with the eagles.  

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17 minutes ago, dinsdale said:

Does anyone else see a contradiction in this statement?

For whom is the rate appropriate, is the question really....it's certainly not good for the country.

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20 minutes ago, dinsdale said:

Does anyone else see a contradiction in this statement?

No i don't seems logical to me.

 

They cut the forecasts for economic growth (result of high baht) and keep the rates how they are (meaning baht stays high). 


Seems the statement is correct. Had they done something they would have adjusted the forecasts up.

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2 hours ago, Fex Bluse said:

Seems they got themselves in a little pickle.

 

Too bad the economy relies on cheap, low-skilled labor.

 

Time to stop holding your arrogant noses in the air and get to work growing up as a country and learning to compete like the rest of us.

 

No time for "sanuk" or other frivolous, superficial nonsense.

Typical Thai stuff - Quick to blame anybody but themselves for failure.

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And actual tourist number arrivals, will continue to drop.

They don't want to easen visa rules.

 

Export and tourism will continue to drop.

They don't let the baht adjust or float.

 

Household debt has been a known problem for years. Zero - 5% downpayment on new car and new motorcycle, that they all must have.

Never elsewhere seen so many with only 400-500 US$ monthly income, who have latest Iphone and or brand new motorcycle.

 

2019 will be a interesting year, when export and actual tourist arrivals continue to drop.

 

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Posted (edited)
1 hour ago, hotchilli said:

The crash will comes soon.

Been saying that for a decade now......

Edited by fulhamster
typo
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3 hours ago, Jonathan Fairfield said:

the central bank might cut interest rates this year

After forcing countless long-stayers to put 800,000 in their banks.  Thailand is run by morons whose only credo is 'how much can I make.'

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Posted (edited)
2 hours ago, dinsdale said:

Does anyone else see a contradiction in this statement?

No.

If "saying monetary policy remains appropriate" applies to protecting the stock market growth bubble.

Offshore the high baht, return it when it devalues and payoff cheap debt.

Where there is a contradiction is Prayut continuing to justify economic stimulus to boost the economy because its failing GDP growth.

Edited by Srikcir
add a contradiction

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6 hours ago, Jonathan Fairfield said:

Exports, a key driver of economic growth, are expected to have zero growth this year

Zero seems a bit optimistic to me

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