Further rate cuts from BoT look unlikely in 2016
Bank of Thailand left its
policy rate unchanged at 1.50% as expected. The central bank dropped the phrase
"sufficiently accommodative" to describe its monetary stance, calling it just
"accommodative". This change could mean that further rate cut from the central
bank are unlikely, but it is definitely not ruling such action out in future
meetings, if needed.
The central bank maintained a dovish tone despite
the growth recovery remaining close to its assessment. The statement continues
to flag that the Thai economy remains in the midst of a moderate recovery. BoT
believes demand-side inflation will continue to support core inflation and keep
deflationary risks contained.
"In our view, today's on-hold decision
masks a more dovish bias on the MPC, which indicates that concerns around the
sustainability of growth recovery have likely risen at the margin. We believe
the BoT may also be assessing the effects of the recent government measures to
boost growth, as announced fiscal spending has been raised for Q1." said
Barclays in a report.