Bank of Thailand trims rates, maintains doveish bias

March 12, 2014

BANGKOK – The Bank of Thailand has trimmed its policy rate by 25 basis points, but ANZ Bank, which had expected the move, cautions that monetary policy might be a limited tool in mitigating a slowdown in domestic activity that is politically-induced.
“We maintain our sub-consensus 2014 growth forecast of 2.2%, given that political normalisation is still out of sight,” ANZ says.

Meanwhile, ratings agency Standard and Poor’s says that whileThailand's rice-pledging scheme highlights a short-sighted and politically-driven approach to policymaking, the scheme on its own will not have any significant impact on Thailand’s credit quality.
The rice-pledging scheme committed the government to buy farmers' crops at significantly higher prices than in the international market, and has led to mounting fiscal losses, accumulating rice stockpiles that Thailand has struggled to sell. Prime Minister Yingluck Shinawatra is being charged with dereliction of duty on account of the losses, and alleged corruption associated with the scheme. www.live.anz.com www.standardandpoors.com (ATI).