Bank of Thailand reduces inflation forecast, predicts higher growth

July 5, 2017

BANGKOK - The Bank of Thailand in a unanimous decision today maintained its interest policy rate steady at 1.50%. It also changed its growth and inflation forecasts – the growth forecast was modestly raised, the inflation forecast lowered more meaningfully.

Against this backdrop, ANZ Bank says it believes the current policy rate will be retained for the rest of the year.

The BoT reduced its headline CPI forecast to 0.8% from 1.2% for 2017 and from 1.9% to 1.6% for 2018. The growth forecast was raised from 3.4% to 3.5% for 2017 and from 3.6% to 3.7% for 2018.

ANZ says it appears that stronger exports have provided the main basis for the upgrade.

“On inflation, the situation is clearer – we now have two consecutive negative inflation prints.

“The BoT’s assessment of better growth prospects, along with the long-held view that the current policy rate is sufficiently supportive of growth, are probably the main considerations behind the policy decision.

“It is also likely that the BoT may be keen to preserve the limited monetary space it now has,” ANZ says. (ATI).