Bank of Thailand holds rates in difficult trade environment

BANGKOK - The Bank of Thailand (BoT) has left rates on hold, with ANZ Bank suggesting that rising food inflation is the most likely cause for its caution. ANZ notes “very clear dovish bias” in the Bank of Thailand’s forecasts and statement. 

“It is too early to call an end to the Thailand easing cycle at this stage, however a faltering in domestic or external demand coupled with a slowing in the ascent of food prices appear to be the necessary preconditions for further easing,” ANZ says.
“The Bank sees persistence of a difficult trade environment, forecasting export growth at -2.5%. We feel this is optimistic given NEER developments and the regional trade recession and also Thailand’s heavy participation in global value chains that appear largely fragmented at this time. 
“The Bank has maintained its 2016 GDP growth forecast at 3.1% - we have no major disagreement with this forecast, expecting 3.0% growth.  The Bank has cut its 2017 GDP forecast to 3.2% - in line with our forecast. This is consistent with a regional and domestic environment that will not produce and strong positive final demand deltas.” www.live.anz.com (ATI).