Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Thai economy faces heightened political uncertainties: central bank minutes

Published 05/22/2019, 12:57 AM
Updated 05/22/2019, 01:00 AM
© Reuters. FILE PHOTO: A view of the Bank of Thailand in Bangkok

© Reuters. FILE PHOTO: A view of the Bank of Thailand in Bangkok

BANGKOK (Reuters) - Heightened political uncertainties in Thailand after an election meant to herald a return to democracy have clouded the outlook for economic policy, the central bank said in minutes of a meeting earlier this month that left interest rates unchanged.

No clear winner emerged from the March 24 election, the first since a military coup in 2014, and the country is still waiting for a new government to be formed.

Whichever party ends up taking the reins, it is likely to be leading a fragile coalition.

Central bank policy makers alluded to potential hazards for the economy in minutes of their May 8 meeting that left the benchmark interest rate unchanged at 1.75%.

"The Thai economy was subject to heightened political uncertainties, which could have implications for economic growth, including a direct effect on government spending in the period ahead and an indirect effect on private consumption and investor confidence," minutes of the bank's monetary policy committee (MPC) meeting said.

Continuing on that theme, another entry said: "Investors remained cautious to invest in Thai assets partly due to domestic political uncertainties."

The minutes also referred to a "rate adjustment", marking a change in wording from the previous policy meeting, held on March 20, which had said "a policy rate increase would be gradual" and follow a data-dependent approach.

Data released on Tuesday showed the Thai economy grew 2.8% in the first quarter from a year ago - the weakest in over four years - and the central bank said earlier this month that this year's growth would be lower than its last forecast of 3.8 percent.

According to the minutes, the committee would need to wait for more clarity due to global economic and domestic political uncertainties.

"Therefore, current accommodative policy would remain appropriate. Going forward, further policy rate adjustment would be gradual and follow a data-dependent approach," they said.

The central bank raised its policy rate in December for the first time since 2011 to help curb financial risks, but has held the rate steady at the three subsequent meetings of its MPC.

The MPC will next review monetary policy on June 19, when it will also give updated economic forecasts. Most economists expect no policy rate change throughout 2019.

© Reuters. FILE PHOTO: A view of the Bank of Thailand in Bangkok

For the full minutes: https://www.bot.or.th/English/MonetaryPolicy/MonetPolicyComittee/ReportMPC/Minutes/MPC_Minutes_32019_hfo2n2nc.pdf

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.