webfact Posted May 20, 2020 Share Posted May 20, 2020 Thailand's central bank cuts policy rate by 25 bps to record low By Orathai Sriring and Kitiphong Thaichareon FILE PHOTO: The Bank of Thailand logo is seen in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva/File Photo BANGKOK (Reuters) - Thailand's central bank cut its benchmark interest rate for the third time this year, as expected, to a record low as the coronavirus pandemic ravages consumption and tourism in Southeast Asia's second-largest economy. The Bank of Thailand's (BOT) monetary policy committee on Wednesday voted 4-3 to cut the one-day repurchase rate <THCBIR=ECI> by 25 basis points to 0.50%, the fifth reduction in borrowing costs since August. The three dissenters favoured no policy change. In a Reuters poll, 16 of 18 economists had predicted a quarter-point cut, while the two others expected the central bank to stay on hold after reducing the rate by 100 bps in the past year. Most members felt extra policy accommodation would help further shield the economy from the fallout of the coronavirus pandemic, adding to the fiscal and financial measures that had already been introduced, according to the statement. The committee also said it expected Thailand's economy to shrink more than previously forecast this year, with exports, tourism, domestic demand and private investment all likely to weaken more than expected. In March, the BOT predicted the economy would contract 5.3% this year, the worst contraction since the 1997-98 Asian financial crisis. It expected exports to fall 8.8%. The government and the central bank have already introduced steps worth billions of dollars to mitigate the virus impact. (Additional reporting by Satawasin Staporncharnchai; Editing by Ana Nicolaci) -- © Copyright Reuters 2020-05-20 - Whatever you're going through, the Samaritans are here for you - Follow Thaivisa on LINE for breaking COVID-19 updates 1 Link to comment Share on other sites More sharing options...
BritManToo Posted May 20, 2020 Share Posted May 20, 2020 How does that change mortgage interest rates? Link to comment Share on other sites More sharing options...
Pib Posted May 20, 2020 Share Posted May 20, 2020 I'm surprised it was such a close vote, 4-3. Would have thought it would be unanimous 7-0 vote to lower the rate. 1 Link to comment Share on other sites More sharing options...
Popular Post kevin612 Posted May 20, 2020 Popular Post Share Posted May 20, 2020 Thailand complains a lot though the covid-19, meanwhile, the Thai baht is rising sharply. 3 Link to comment Share on other sites More sharing options...
Isaan sailor Posted May 21, 2020 Share Posted May 21, 2020 They did the right thing—a bit late, but they did it. An overpriced currency is the last thing they need during a worldwide recession. Link to comment Share on other sites More sharing options...
Pib Posted May 21, 2020 Share Posted May 21, 2020 1 hour ago, Isaan sailor said: They did the right thing—a bit late, but they did it. An overpriced currency is the last thing they need during a worldwide recession. Doesn't appear to have had any affect on the exchange rate...in fact, the baht is a little stronger since yesterday. The rate's cut primary focus was to make it easier for Thai banks to get money from the BOT....the more money Thai banks have cheap access to the more they will continue to loan....and many people are now trying to obtain loans to get thru this COVID period. 2 Link to comment Share on other sites More sharing options...
digger70 Posted May 21, 2020 Share Posted May 21, 2020 3 hours ago, Isaan sailor said: They did the right thing—a bit late, but they did it. An overpriced currency is the last thing they need during a worldwide recession. Ain't going to make any difference to the normal Joe blow and us Expats . The exchange isn't going to go in our favour for a long time. Link to comment Share on other sites More sharing options...
Trillian Posted May 22, 2020 Share Posted May 22, 2020 On 5/21/2020 at 10:39 AM, Pib said: Doesn't appear to have had any affect on the exchange rate...in fact, the baht is a little stronger since yesterday. The rate's cut primary focus was to make it easier for Thai banks to get money from the BOT....the more money Thai banks have cheap access to the more they will continue to loan....and many people are now trying to obtain loans to get thru this COVID period. The Central Bank rate is the amount of interest that BOT pays Thai banks to deposit their excess funds overnight. Reducing the rate does not make it easier for Thai banks to borrow funds from the central bank, in fact it reduces their income. If Thai banks want to lend more they must first attract new deposits or hope that BOT relaxes the capital adequacy rules which is highly unlikely. Link to comment Share on other sites More sharing options...
Pib Posted May 22, 2020 Share Posted May 22, 2020 20 minutes ago, Trillian said: The Central Bank rate is the amount of interest that BOT pays Thai banks to deposit their excess funds overnight. Reducing the rate does not make it easier for Thai banks to borrow funds from the central bank, in fact it reduces their income. If Thai banks want to lend more they must first attract new deposits or hope that BOT relaxes the capital adequacy rules which is highly unlikely. No, you are thinking "Reverse Repo Rate." The Repo Rate (which BOT just cut) is where a commercial bank provides a security/collateralto secure overnight, 1 day cash from BOT to meet the commercial bank's cash needs. It's like putting up some collateral to borrow cheap, short term money from the BOT so the bank can meet it needs such as making loans to it's customers. Below snapshot from the Reserve Bank of India does a good job of explaining central bank (i.e., BOT, RBI, etc) repo rate....the 1 day rate that the BOT just lowered. Also talks "Reverse" Repo Rate. 1 Link to comment Share on other sites More sharing options...
Trillian Posted May 22, 2020 Share Posted May 22, 2020 11 hours ago, Pib said: No, you are thinking "Reverse Repo Rate." The Repo Rate (which BOT just cut) is where a commercial bank provides a security/collateralto secure overnight, 1 day cash from BOT to meet the commercial bank's cash needs. It's like putting up some collateral to borrow cheap, short term money from the BOT so the bank can meet it needs such as making loans to it's customers. Sorry, yes you are right, but since the two rates move in tandem, at the same time, it's difficult to understand the real motive behind the change. Was it as you suggest, to improve lending to customers, or was it intended to stimulate a consumer led recovery by removing the incentive to save, or perhaps it was both. I read somewhere that Thai central bank rates are not allowed by law to go lower than about 0.50%, if that is still the case then we are t the bottom, interest rate wise. Link to comment Share on other sites More sharing options...
Pib Posted May 23, 2020 Share Posted May 23, 2020 I doubt there is any lowest rate set in law. But BOT's latest cut is a record low for BOT....and still room to go lower. https://asia.nikkei.com/Economy/Thailand-cuts-interest-rates-to-record-low-as-coronavirus-spreads Link to comment Share on other sites More sharing options...
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