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BOT cuts key rate from 1.75 to 1.50 percent

The Thai economy was expected to expand at a lower rate than previously assessed and below potential due to the slowdown of trading partner economies and global trade

Olivier Languepin

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For the first time since 2015, the Bank of Thailand cut its benchmark interest rate on Wednesday, by 0.25 percentage point from 1.75 to 1.50 percent, effective immediately

In deliberating their policy decision, the Monetary Policy Committee (MPC) assessed that the Thai economy would expand at a lower rate than previously assessed due to a contraction in merchandise exports, which started to affect domestic demand.

The Thai economy was expected to expand at a lower rate than previously assessed and below potential due to the slowdown of trading partner economies and global trade, which were affected by intensifying trade tensions that could expand to other countries.

However, the relocation of production base to Thailand and public-private partnership projects for infrastructure investment would support investment in the period ahead.

Public expenditure would grow at a slower pace than previously estimated on account of public investment, which was partly a result of constrained budget disbursement, as well as the expected delay in the enactment of the Annual Budget Expenditure Act, B.E. 2563 (A.D. 2020).

The Thai baht has been Asia’s best performing currency in 2019, according to Bloomberg estimates, rising by more than 6 per cent against the dollar in the year to date.

Both exports and tourism industry, which have been under performing in the year to date, have been hurt by the rising Thai currency .

Source : Bank of Thailand

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