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MNI STATE OF PLAY: Bank Of Thailand Looks To Economy Re-Open

MNI (Sydney)

The central bank is expected to hold rates steady in the latest policy review on hopes of restarting the economy from lockdown conditions.

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The Bank of Thailand is expected to hold interest rates at a record low 0.50% on Wednesday despite earlier pressure from some board members for a cut to bolster the pandemic-hit economy.

There was a 4-2 split decision last month with some members of the monetary policy committee in favour of a cut as lockdown conditions bite, see: MNI STATE OF PLAY: Thai CENBANK Steady In Split Vote.


The BoT's one-day repurchase rate has been steady for over a year and since then the central bank's monetary response has been a USD11.2 billion program of soft loans to prop up businesses until the crucial tourism industry can re-open. The BoT last month relaxed loan classifications to prompt debt restructuring between banks and borrowers.

But the measures have had a limited impact.

The central bank has progressively cut its growth forecasts for 2021 down to 0.7% and is expected to give an update tomorrow. Earlier this week BoT Governor Sethaput Suthiwartnarueput said growth could struggle to reach 1%.


Despite this, the BoT may see that the outlook is brightening with pandemic restrictions progressively easing and the economy re-opening.

The Thai government recently gave itself more room for fiscal policy, lifting the public debt ceiling from 60% to 70% to raise more funds. It has borrowed just under USD45 billion so far to fund recovery programs.

The BoT has said the government needs to increase fiscal spending by another USD30 billion.

BoT Governor Suthiwartnarueput has said that monetary policy will remain accommodative, but that is unlikely to result in a rate cut tomorrow as the central bank keeps ammunition in reserve in case current measures and fiscal policy fail to gain traction, or if the pandemic lockdowns return.