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Bank of Thailand surprises with Unexpected rate cut to 1.50 percent

The Bank of Thailand voted to reduce the policy rate by 0.25 percentage point from 1.75 to 1.50 percent per annum with immediate effect.

Daniel Lorenzzo

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Mr Methee Supapong, secretary of the committee, explained that the main reason for the majority of the committee to slash the policy rate was that the economy has recovered at lower rate than projected.

The Bank of Thailand voted to reduce the policy rate by 0.25 percentage point from 1.75 to 1.50 percent per annum with immediate effect.

Two members voted to maintain the policy rate at 1.75 percent per annum. Key considerations for policy deliberation are as follows.

The Thai economy is projected to recover at a slower pace than assessed in the previous meeting. The pickup in public investment and positive trend in tourism should help shore up the economy, but could not fully offset the weaker-than-expected exports of goods and private consumption in the first quarter of 2015.

Furthermore, looking ahead, exports of goods are subject to higher downside risks from the slowdown in China, shifting global and regional trade structure as Thailand’s major trading partners rely less on imports, and pressure from recent Thai baht appreciation. The contraction in exports could weigh down private investment and consumption through reduced purchasing power and weaker private confidence.

Source : Bank of Thailand

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