By Shabnam Muzammil:
Despite renewed efforts by Finance Minister Kittiratt Na-Ranong to compel the Bank of Thailand (BOT) to slash its benchmark interest rate, the Monetary Policy Committee (MPC) is under no pressure to do so, BOT Governor Prasarn Trairatvorakul said.
“All MPC members are mature. They will review all data. Whatever the resolution will be, the MPC will be ready to explain.”
Moreover, the MPC will hold a meeting tomorrow, a week after the National Economic and Social Development Board reported dismal figures for Q1, which resulted in a lower full-year GDP forecast of 4.2 percent to 5.2 percent, from 4.5 percent to 5.5 percent.
The 5.3 percent GDP growth for Q1 is also lower than Bloomberg’s six percent forecast and the central bank’s seven percent forecast.
A BOT team has been assigned to examine the details of the Q1 report and the slower growth.
Meanwhile, Finance Minister Kittiratt said the prevailing policy rate (2.75 percent) must be reduced by over 25 basis points (bps), as the lower rate would weaken the baht and increase export demand.
“If the rate is not cut, or cut by only 25bps, the MPC is oblivious of the situation. It is so, even when the rate is cut by 50bps,” he added.
In addition, Thailand’s exports in Q1 only grew by 4.3 percent due to a stronger baht and weak global demand, especially from China. Nevertheless, the currency’s exchange rate has weakened to nearly 30 baht per one US dollar from its April peak of 28.53 baht.
Shabnam Muzammil, Senior Journalist at PropertyGuru, wrote this story. To contact her about this or other stories email shabnam@allproperty.com.sg
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