Unlike India, Malaysia and New Zealand where the central banks reduced their respective policy rate, the Bank of Thailand (BoT) held its benchmark interest rate unchanged at 1.75% for a third straight meeting, citing the monetary policy is still accommodative while risks to financial stability remained. The one-day repurchase rate was last raised by 25bps in December 2018, the first hike since 2011.

Although BoT has not fully shut the door to tighten their monetary measures going forward, yet they acknowledged the downside risk on the 3.8% GDP growth target for 2019 where we are looking at 3.5%, added with low inflation envisaged to be at the lower end of the 1% - 4% target, to which we are looking at 1%. So, we are of the view that it will be tough on BoT to justify for a rate hike in 2019 and expect the 1.75% policy rate to remain unchanged in 2019.

• Unlike India, Malaysia and New Zealand where the central banks reduced their respective policy rate, the Bank of Thailand (BoT) held its benchmark interest rate unchanged for a third straight meeting, citing the monetary policy is still accommodative while risks to financial stability remained. The one-day repurchase rate is at 1.75% which was last raised in December 2018 by 25bps, the first hike since 2011.

• Looking at the BoT’s statement, they indicated that “there remained a need to address financial stability risks through a combination of tools, including the appropriate policy interest rate as well as ‘micro and macro’ prudential measures”. This could mean that BoT has not fully shut the door to tighten their monetary measures going forward.

• But at the same time, BoT acknowledged the downside risk on its 3.8% GDP growth is increasing. They are of the view that the economy is expected to grow at a slower pace than previously assessed following recent set of disappointing figures. We are looking at 3.5% GDP growth for 2019.

• Added with low inflation outlook where BoT expects it to be at the low end of its 1-4% target range where we are looking at 1.0%, we are of the view that it will be tough on BoT to justify for a rate hike in 2019. We expect the policy rate to remain unchanged at 1.75% throughout 2019.

Source: AmInvest Research - 9 May 2019