Bank of Thailand Watch Stability and development are themes for 2017

Stocks and Financial Services Press Releases Monday December 19, 2016 12:56
กรุงเทพฯ--19 ธ.ค.--HSBC Thailand
*The Bank of Thailand will likely keep its policy rate on hold on 21 December while any forecast changes will likely be inconsequential for the policy rate outlook
*We lower our inflation forecasts for 2017 and 2018 given recent downward surprises and a tepid demand recovery
*With downside risks to growth receding, the BoT will likely shift its focus towards financial stability and developing the financial system
No change in policy stance likely for some time

We expect the Bank of Thailand to maintain its policy rate at 1.5% on 21 December and keep its tone on monetary policy broadly unchanged. The BoT's quarterly economic forecasts are unlikely to change significantly as the central bank awaits the unfolding of external events (e.g. US trade policy and stimulus measures) and more data from the Thai economy to determine the degree of the slowdown in Q4.

Minutes of the 9 November policy rate meeting showed that the BoT saw increased downside risks to economic growth from policy uncertainty of key developed economies and volatility in the financial markets. Still, economic growth appears to be stabilizing, supported in part by short-term fiscal stimulus measures, some of which were recently reinstated to pre-empt a further slowdown.

We tweak our 2017 and 2018 headline inflation forecasts lower to 1.7% and 2.0%, from 2.0% and 2.1%, respectively. Inflation had surprised on the downside recently due to tepid demand, while businesses still lack pricing power. There will be some oil price base effects lifting inflation, but the state oil fund can be used to smooth retail prices. Hence, the BoT is unlikely to have inflation concerns for a while. Furthermore, given the sound external stability and a relatively stable THB Nominal Effective Exchange Rate (NEER), we expect the BoT to continue to curb only short-term exchange rate volatility to allow time for the private sector to hedge risks.

BoT to continue to focus on financial stability and financial development

In the 9 December joint-meeting of the Monetary Policy Committee and the Financial Institutions Policy Committee, the BoT stated that financial stability remains sound, except for a decline in loan quality and "search-for-yield" behaviour, which still warrant monitoring. Therefore, we see a small probability of further policy rate cuts and think the BoT will continue to expend substantial effort ensuring financial stability and developing the financial sector and landscape.


Latest Press Release

Photo Release: CIMB Group Joins RippleNet to Power Instant Payments Across ASEAN

Tengku Dato' Sri Zafrul Aziz, Group CEO of CIMB Group (right), and Brad Garlinghouse, Ripple CEO (left) commemorating the strategic collaboration between CIMB Group and Ripple to power instant payments across ASEAN at the Singapore FinTech festival 2018...

CIMB Group Joins RippleNet to Power Instant Payments Across ASEAN

CIMB is one of the first banks to leverage blockchain technology to tap into region's USD120 billion remittance business CIMB Group ("CIMB" or "the Group") and Ripple have entered into a strategic collaboration to enable instant cross border payments...

Fitch Rates EXIM#s USD Senior Notes #BBB+(EXP)#

Fitch Ratings has assigned an expected rating of 'BBB+(EXP)' to Export-Import Bank of Thailand's (EXIM, BBB+/Stable) five-year senior unsecured notes of up to USD300 million. The notes will be issued under the bank's USD1.5 billion medium-term note (MTN)...

KTC joins hands with partners to launch new payment method Garmin Pay.

Mrs. Pittaya Vorapanyasakul (right center), Executive Vice President - Credit Card Business, "KTC" or Krungthai Card Public Company Limited together with Mr. Krairop Luang U-Thai (left center), General Manager, GIS Company Limited, Miss Aileen Chew...

Photo Release: Newly redesigned K-Cash Connect Plus website to facilitate business customers

Mr. Silawat Wantivisat, KBank Executive Vice President, introduced the newly redesigned K-Cash Connect Plus website, which is more user-friendly for business customers to facilitate their online financial transactions and data verification with greater...

Related Topics