Thailand Holds Rate With Inflation Forecast to Reach TargetBy
All economists predicted the decision to keep key rate at 1.5%
Inflation to return to 1%-4% range in 2Q, central bank says
Thailand’s central bank left its benchmark interest rate unchanged near a record low, while forecasting inflation will pick up and return to the target range next quarter.
Monetary policy committee members voted unanimously to hold the one-day bond repurchase rate at 1.5 percent, where it’s been since 2015, according to a Bank of Thailand statement on its website on Wednesday. The decision was predicted by all economists in a Bloomberg survey.
The Bank of Thailand, which has missed its inflation target of 1 percent to 4 percent in the past three years, is grappling with a stronger currency that’s limiting price gains and posing a threat to the nation’s exports, one of the main drivers of growth. The baht has gained more than 11 percent in the past 12 months, among the best performers in Asia.
Inflation will return to the target range in the second quarter, Assistant Governor Jaturong Jantarangs said in a briefing in Bangkok. In response to a query about what would make the monetary authority mull a hike in the key rate, Jaturong said it was too early to discuss that.
As central banks in South Korea and Malaysia kick off monetary policy tightening in Asia, speculation is building about whether the Bank of Thailand will follow too. Most economists surveyed by Bloomberg predict it will stay on hold throughout this year.
“Thailand is one of the central banks where our conviction is much higher that policy rates will remain on hold for one of the longest periods,” said Rahul Bajoria, a senior economist at Barclays Plc in Singapore. “Unless growth or inflation picks up very, very sharply, but we don’t see that happening.”
Thailand’s military government has prioritized infrastructure projects and the development of advanced industries as additional drivers for the $407 billion economy.
Former army chief and now prime minister, Prayuth Chan-Ocha has also sought to expand support for people on low incomes, and this year presided over the first increase in the national minimum wage in five years.
— With assistance by Michael J Munoz, and Sunil Jagtiani