BANGKOK: Thailand’s central bank cut its benchmark interest rate for the third time this year, as expected, to a record low as the coronavirus pandemic ravages consumption and tourism in Southeast Asia’s second-largest economy.
The Bank of Thailand’s (BOT) monetary policy committee on Wednesday voted 4-3 to cut the one-day repurchase rate by 25 basis points to 0.5%, the fifth reduction in borrowing costs since August. The three dissenters favoured no policy change.
In a Reuters poll, 16 of 18 economists had predicted a quarter-point cut, while the two others expected the central bank to stay on hold after reducing the rate by 100 bps in the past year.
Most members felt extra policy accommodation would help further shield the economy from the fallout of the coronavirus pandemic, adding to the fiscal and financial measures that had already been introduced, according to the statement.
The committee also said it expected Thailand’s economy to shrink more than previously forecast this year, with exports, tourism, domestic demand and private investment all likely to weaken more than expected.
In March, the BOT predicted the economy would contract 5.3% this year, the worst contraction since the 1997-98 Asian financial crisis. It expected exports to fall 8.8%.
The government and the central bank have already introduced steps worth billions of dollars to mitigate the virus impact. – May 20, 2020, Reuters
