Bank of Thailand set to cut rates on August 13 to support economy: Reuters poll
Thailand's central bank left its policy rate unchanged in June but noted it was open to cutting as needed to counter the effects of an economic outlook that has turned highly uncertain in recent months.
Central bank data showed private consumption contracted 0.3 per cent and exports fell nearly 5.0 per cent in June compared with May. This, along with negative inflation for the fourth consecutive month in July, will give policymakers room to cut on August 13.
More than 80 per cent of economists, 23 of 28 in the August 4-8 Reuters poll, predicted the BOT would cut its benchmark one-day repurchase rate by 25 basis points to 1.50 per cent on Wednesday. The rest expected no change.
"The economy is undeniably softening," Erica Tay, director of macro research at Maybank, said.
"The case for an August rate cut has grown stronger. The latest inflation data showed core inflation has reversed its rising trend. Weakening core inflation upends the belief recent price weakness is mostly due to global oil prices and weather-related food supply shifts," she added.
Among those who gave a longer-term outlook, 19 of 26 expected rates at 1.25 per cent by the end of 2025, seven said 1.50 per cent and one forecast 1.00 per cent.
Vitai Ratanakorn will take the helm at the BOT on October 1 and he has said rates can go down much further.
With the U.S. placing tariffs on Thai goods of 19 per cent, albeit less than the initially proposed 36 per cent, economists expect a hit to growth.
A separate Reuters poll taken in July forecast growth at 1.3 per cent and 0.9 per cent in the third and fourth quarters, respectively.
"If you look at export growth, it's been in double digits until recently, mainly due to a rush by the U.S. to import goods from Thailand and other trading partners," Poon Panichpibool, a markets strategist at Krung Thai Bank, said.
"This will come down, and we'll see much slower growth, which is going to reduce overall economic growth in the second half."
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