By Orathai Sriring
BANGKOK (Reuters) – Thailand’s central bank is widely expected to leave its key interest rate at a record low on Wednesday as tougher coronavirus restrictions have been eased to support a flagging economy, a Reuters poll showed on Monday.
The Southeast Asian country’s worst coronavirus outbreak led to restrictions in July and August that hit economic activity, but the curbs have since been eased https://www.reuters.com/article/idUSL1N2Q006L and Thailand will soon reopen to more vaccinated visitors.
For more fiscal flexibility, the government recently raised the public debt ceiling to combat the spread of the virus. On Monday, the Bank of Thailand Governor said that they were ready to implement any measures necessary.
According to the survey, twenty-three percent of 23 economists expected that the BOT’s Monetary Policy Committee will hold the one day repurchase rate at 0.500% this week in order to maintain limited policy ammunition.
Three economists predicted a quarter-point cut, citing weak growth and the MPC’s split decision at the August meeting, when it cut the 2021 growth forecast https://www.reuters.com/article/idUSL4N2PA3QW to 0.7% from 1.8%.
On Wednesday, the BOT will release a revised forecast. On Monday, Governor Sethaput Suthiwartnarueput stated that growth may not exceed 1% in this year’s fiscal year.
Sethaput stated last month to Reuters that interest rates were a blunt instrument, and Somchai Jitsuchon – a non central banker of the MPC – said that lower rates wouldn’t help.
Panundorn Aruneeniramarn from Siam Commercial Bank (OTC) said there was a 30% chance for a rate reduction after the last meeting. However, the economy has improved since then so the BOT might save its ammunition in the worst-case scenario.
Kobsidthi Silpachai from Kasikornbank is head of capital market research and predicted no rate increase this week.
Capital Economics’ economist Gareth Leather forecasted a quarter-point rate reduction this week. This was based on an economy in “the doldrums”, and fears about deflation.
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