Thailand: BoT seen on hold in 2021 – UOB

Senior Economist Alvin Liew and Senior FX Strategist Peter Chia at UOB Group reviewed the latest decision by the Bank of Thailand (BoT).

Key Quotes

“The Bank of Thailand (BOT) as widely expected, kept its one-day repurchase rate unchanged at 0.50% for the fifth consecutive meeting which is also the last meeting for 2020... The decision to keep its policy rate unchanged was voted unanimously by all six present committee members (one of the seven committee members was unable to attend this meeting).”

“The BOT also upgraded its Thai GDP trajectory for 2020, now expecting it to contract by - 6.6% (versus -7.2% previously) due to improvement in private consumption and merchandise exports. The BOT also projects the economy expanding at 3.2% in 2021 (lower than previous forecast of 3.6%) and by a further 4.8% in 2022.”

“Other concerns cited by the BOT were the unevenness in the recoveries across economic sectors, financial vulnerabilities among households and SMEs.”

“For now, we keep our call for BOT to leave its benchmark rate unchanged at 0.50% for 2021, but we are cognizant about the near term risks related to the resurgence of COVID-19 infections, both domestically and globally, before the vaccines can be broadly and effectively rolled out. The next (and first) meeting in 2021 will be on 3 February.”