In line with our and consensus expectations, the Bank of Thailand (BoT) kept its policy rate steady at 1.50%. It has maintained this rate since April 2015. Against a backdrop of a gradual economic recovery and tame inflation, we reiterate our view that the BoT will continue to maintain its supportive monetary policy through 2017 to see through a more broad-based recovery in domestic demand. Hence, we believe the BoT is expected to maintain its policy rate of 1.50% for the rest of the year.

• In line with our and consensus expectation, the Bank of Thailand (BoT) kept its policy rate steady at 1.50%. It has maintained this rate since April 2015.

• The economic recovery is gradually gaining traction from stronger exports and tourist arrivals. Besides, private consumption is gaining strength from higher incomes in the tradables sector and improved farm incomes.

• Still, the economy needs a more broad-based recovery. Private investment is still contracting due to a slowdown in credit growth, added with a low capacity utilisation rate around 60%. For capex to improve, private investment needs to pick up which is quite unlikely, unless strong exports come to aid.

• Against a backdrop of a gradual economic recovery and tame inflation, we reiterate our view that the BoT will continue to maintain its supportive monetary policy through 2017 to see through a more broad-based recovery in domestic demand. Hence, we believe the BoT is expected to maintain its policy rate of 1.50% for the rest of the year.

Source: AmInvest Research - 25 May 2017