All Eyes On the Potential of Interest Rate Cut at the 4th-Meeting of BOT on June 26, 2019

The Bank of Thailand  (BOT) is arranging the fourth meeting on Wednesday, June 26, 2019  to discuss about the monetary policy of Thailand. Due to BOT has been maintaining the rate steady since the rise in December 2018 for the first time in seven years, the policy rate issue tends to be tabled again in the discussion. However, the policy has not changed and moved forward with the easing policy which BOT gave a reason that the policy rate will depend on economic data.

The report in May 2019 has presented a slow number of economic growth and low inflation at 1.15% that seems match with the easing policy of BOT, although BOT concerns about the risk of financial stability and high household debt.

According to a Reuters poll on BOT’s monetary policy, most of the economist said there is a less possibility that BOT will change the policy due to a domestic factor such as uncertainty of forming the government. BOT still want to see a certain direction and the way to stimulate economic growth of the new government.

Charnon Boonnuch, economist of Nomura in Singapore said “The tone should continue to be more dovish on the growth outlook… but we do not expect the BOT to cut the policy rate in 2019, owing to its concerns about financial stability” and limited room to cut, he said.”

Moreover, Prakash Sakpal, economist of ING in Singapore has said about the upcoming meeting held this week that “if only to reverse the 25 bp rate hike from late 2018,” and “It’s hard to imagine the BOT ignoring the 1Q GDP data, while activity data for the second quarter doesn’t offer much hope that the worst is over.”

However, all eyes are on the BOT’s meeting this coming Wednesday. What will be the result of monetary policy of Thailand? Whether the rate will be raised or not?