Display mode (Doesn't show in master page preview)

30 Apr 2019

Financial Institutions

MPC Meeting, May 8, 2019: Policy Rate Likely on Hold Pending Economic Development (Business Brief No.3800)

            We at KResearch expect that the Bank of Thailand's Monetary Policy Committee (MPC) will likely keep its policy rate intact at 1.75 percent during the third meeting of 2019 pending an assessment of Thai economic development and results of the implementation of macro-and micro-prudential monetary policies, for example, through the introduction of maximum LTV ratio and credit underwriting standards. Such specific monetary policies are aimed at maintaining economic stability while the government stimulus measures, which are expected to be introduced during the middle of 2019, may help ease economic risks somewhat.  

            Although inflation will likely rise as a result of the daily minimum wage hike scheduled for the middle of 2019, its effect on the economy will be limited because daily minimum wage will be raised at a gradual pace amid numerous downside risks to the Thai economy, though appropriate actions will be undertaken by the new government. Despite rising domestic energy prices and public bus fares, plus a high 2018 base of energy prices, inflation may not increase much in 2019. It will also be undermined by intense competition among e-commerce entrepreneurs to grab greater share of the market. As a result, benign inflation will likely induce the MPC to maintain its policy rate at least during the remainder of 2019.

           Looking ahead, it is expected that the MPC will continue to monitor risks to the establishment of a new government, fiscal stimulus measures and global economic development, in particular trade disputes.

 




Financial Institutions