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

KASIKORNBANK announces 2018 net profit of Baht 38,459 Million

Mr. Patchara Samalapa, President of KASIKORNBANK, said KASIKORNBANK announced net profit for the year of 2018 of Baht 38,459 Million, an increase of Baht 4,121 Million or 12.00% over the previous year. Operating performance for the year of 2018 compared...

Siam Commercial Bank reported 2018 net profit of Baht 40.1 billion

Siam Commercial Bank and its subsidiaries announced net profit of Baht 7.1 billion in the fourth quarter of 2018 and Baht 40.1 billion for 2018 (based on unaudited consolidated financial statements), a 7.1% yoy decrease from a year ago. Total operating...

Johnson Johnson Completes Acquisition of Ci:z Holdings Co., Ltd.

Johnson & Johnson (NYSE:JNJ) today announced the completion of the acquisition of Ci:z Holdings Co., Ltd. (TYO: 4924) (the "Company") for a total purchase price of approximately JPY / CNY230 billion. The acquisition was completed through a series of...

Siam Commercial Bank Partners with Chaixi Bameekiao and Visa To facilitate QR payment for noodle franchise

- Ms. Pimjai Tongmee, SCB's Payment Product Sales and Delivery Division Executive Vice President - Mr. Panrob Kamla, President of Chaixi Bameekiao Co. Ltd - Mr. Suripong Tantiyanon, Country Manager for Visa Thailand "Siam Commercial Bank" (SCB)...

Isotropic Systems Raises $14 Million in Series A Funding Led by Boeing HorizonX Ventures to Advance Space-Based Connectivity

- Isotropic's approach to next-generation integrated terminal creates profound change in terminal economics and performance to unlock the satellite industry's full potential Isotropic Systems Ltd., the next-generation integrated satellite terminal...

Related Topics