Latest news with #SakkapopPanyanukul
Gulf Today
8 hours ago
- Business
- Gulf Today
Thailand holds rates, but more easing expected amid tariff risks
Thailand's central bank left its key interest rate unchanged on Wednesday, as expected, saying it was saving some policy ammunition if needed to support an economy expected to slow amid trade uncertainty and renewed domestic political turmoil. The central bank said growth was stronger than expected in the first half of the year, in part because of frontloading of export orders to beat US tariffs, but noted the outlook was uncertain and it was ready to cut rates as needed. The Bank of Thailand's monetary policy committee voted 6 to 1 to keep the one-day repurchase rate at 1.75%, the lowest in two years. The BOT said its rate cuts in February and April were providing some support to the economy. "The Thai economy is projected to slow down going forward, as a result of increasing risks to merchandise exports stemming from US trade policies as well as geopolitics and domestic factors," it said in a statement. The stronger-than-expected start to the year saw the BOT lift its central-case growth forecast to 2.3% for 2025, almost matching last year's 2.5% and more optimistic than some market analysts. Assistant Governor Sakkapop Panyanukul told a press conference that the committee was ready to "react if the economy is slower than expected." "The BOT's tone remains dovish, pointing to room for further accommodation in the coming months," said Lavanya Venkateswaran, senior ASEAN economist at OCBC. "Our baseline is for another 25 basis point cut in the second half as downside risks to growth remain rife from perceived domestic political uncertainties and U.S. tariff risks," she said. Capital Economics said it expected 50 basis points of rates cuts before the end of the year. Thailand faces a 36% U.S. tariff on its exports, a key driver of growth, if it fails to negotiate a reduction before a moratorium expires in July. A tariff of 10% has been set for most nations while the moratorium is in place. The baht was largely unchanged against the U.S. dollar after the decision to hold rates steady, which had been expected by 21 of 33 economists in a Reuters poll. Thailand's economy has struggled with weak consumption, soaring household debt, slowing tourism, trade uncertainty and potentially steep U.S. tariffs. The BOT also lowered its forecast for tourist arrivals, a strng domestic growth driver, to 35 million this year. Adding to the challenges is a fresh round of political turmoil that could bring down Prime Minister Paetongtarn Shinawatra or the coalition government led by her Pheu Thai party. Sakkapop said that the political issues had not been factored into its forecasts, and the central bank would wait to see developments. Meanwhile, Thai stocks and the baht were largely unchanged on Wednesday after the country's central bank stood pat on rates, as expected, while other Asian currencies and equities rose as easing Middle East tensions lifted sentiment. The currency was trading at 32.623 per dollar after the Bank of Thailand (BoT) held its key one-day repurchase rate steady at 1.75%, following two straight cuts, as it looked to preserve limited policy space amid persistent trade uncertainty and deepening political turmoil. The central bank said its monetary policy remained accommodative to support the economy and that it was ready to adjust interest rates if needed. "BoT's tone remains dovish, pointing to room for further accommodation in the coming months. Our baseline is for another 25 basis point cut in 2H25 as downside risks to growth remain rife from perceived domestic political uncertainties and U.S. tariff risks," said Lavanya Venkateswaran, senior ASEAN economist at OCBC. The country has been gripped by political uncertainty after the Bhumjaithai Party, fresh off its exit from the ruling coalition, said it would pursue a no-confidence motion against Prime Minister Paetongtarn Shinawatra and her cabinet, piling pressure on the embattled government. Agencies
Business Times
19 hours ago
- Business
- Business Times
BOT holds rate, raises growth forecast despite risks
[BANGKOK] The Bank of Thailand (BOT) held its key interest rate unchanged and unexpectedly raised its growth forecast for 2025, even as it assessed risks ranging from US tariffs to the conflict in the Middle East. The central bank's seven-member Monetary Policy Committee voted 6-1 to maintain the one-day repurchase rate steady at 1.75 per cent at Wednesday's (Jun 25) meeting as predicted by 15 of 21 economists surveyed by Bloomberg. The rest forecast a quarter-point cut. The BOT now sees 2025 economic growth at 2.3 per cent, a slight improvement from the range of 1.3 per cent to about 2 per cent forecast in April. The revision was mainly due to improving exports and manufacturing in the first-half of the year, due to frontloading on tariff concerns, BOT assistant governor Sakkapop Panyanukul said at a briefing after the decision, with 2025 growth unlikely to slow to below 2 per cent if there is no major shock. 'Looking ahead, the economy is expected to slow down in the second half of 2025, as merchandise exports are facing headwinds from US tariffs and private consumption will moderate in line with weakening income and consumer confidence,' the MPC said. Growth will likely slow to 1.7 per cent in 2026. Following the first back-to-back cut since 2020, Wednesday's decision to hold the key rate reflected 'high uncertainty and limited policy space,' the MPC said. Governor Sethaput Suthiwartnarueput had warned in May that the BOT had limited policy 'ammunition' after 75 basis points of rate cuts since October. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Previous policy rate cuts have already provided some cushion against the prevailing risks, the MPC said. 'The committee deems that monetary policy should be accommodative to support the economy looking forward.' The baht gained 0.2 per cent versus the dollar to 32.612 as of 2.30 pm in Bangkok on Wednesday, strengthening in tandem with the Malaysian ringgit and the Indonesian rupiah as jitters about hostilities in the Middle East eased. The benchmark Stock Exchange of Thailand Index traded 0.5 per cent higher after the decision. Last week's fracture in the ruling coalition adds to risks for South-east Asia's economy, just as the government holds talks to avert a threatened 36 per cent tariff on exports to the US. Continued attacks in Israel and Iran are also spurring global oil prices higher, posing a risk to Thailand, which imports for its fuel needs. Also underlining the improved full-year outlook is the BOT's view that the trade war could be less severe. The BOT's base case assumes an 18 per cent tariff rate will be applied to Thailand – half the rate announced in April – and 10 per cent for other countries. Still, consumption is also softening, the number of foreign tourists is on the decline, and businesses are facing challenges from cheaper imports, the BOT said. UBS Group has downgraded Thai stocks to neutral from overweight on concerns over policy direction and investor sentiment. Meanwhile, price pressures are seen remaining modest. Headline inflation is estimated to remain low at 0.5 per cent this year and 0.8 per cent in 2026, below the central bank's 1 per cent to 3 per cent target. The BOT also sees the core gauge coming in at 1 per cent in 2025 and 0.9 per cent in 2026. 'The Committee assesses that the economic outlook remains highly uncertain,' it said. 'It stands ready to adjust monetary policy as appropriate in response to future trends and risks concerning both the economy and inflation.' Thailand remains one of South-east Asia's economic laggards, though exports surged the most since early 2022 in May as companies rushed to stockpile goods before US tariffs hit. Authorities have begun long-delayed talks with the US in a bid to reduce the Trump administration's threatened levy. Today's decision is one of the last under Governor Sethaput Suthiwartnarueput, who will complete his five-year term on Sep 30. An independent selection panel shortlisted Vitai Ratanakorn, president of the Government Savings Bank, and BOT Deputy Governor Roong Mallikamas from a list of six applicants who were interviewed on Tuesday. BLOOMBERG
Business Times
a day ago
- Business
- Business Times
Thailand holds rate, raises growth forecast despite risks
[BANGKOK] The Bank of Thailand (BOT) held its key interest rate unchanged and unexpectedly raised its growth forecast for 2025, even as it assess risks ranging from US tariffs to the conflict in the Middle East. The central bank's seven-member Monetary Policy Committee voted 6-1 to maintain the one-day repurchase rate steady at 1.75 per cent at Wednesday's (Jun 25) meeting as predicted by 15 of 21 economists surveyed by Bloomberg. The rest forecast a quarter-point cut. The BOT now sees 2025 economic growth at 2.3 per cent, a slight improvement from the range of 1.3 per cent to about 2 per cent forecast in April. The revision was mainly due to improving exports and manufacturing in the first-half of the year, due to frontloading on tariff concerns, BOT Assistant Governor Sakkapop Panyanukul said at a briefing after the decision, with 2025 growth unlikely to slow to below 2 per cent if there is no major shock. 'Looking ahead, the economy is expected to slow down in the second half of 2025, as merchandise exports are facing headwinds from US tariffs and private consumption will moderate in line with weakening income and consumer confidence,' the MPC said. Growth will likely slow to 1.7 per cent in 2026. Following the first back-to-back cut since 2020, Wednesday's decision to hold the key rate reflected 'high uncertainty and limited policy space,' the MPC said. Governor Sethaput Suthiwartnarueput had warned in May that the BOT had limited policy 'ammunition' after 75 basis points of rate cuts since October. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Previous policy rate cuts have already provided some cushion against the prevailing risks, the MPC said. 'The Committee deems that monetary policy should be accommodative to support the economy looking forward.' The baht gained 0.2 per cent versus the dollar to 32.612 as of 2.30 pm in Bangkok on Wednesday, strengthening in tandem with the Malaysian ringgit and the Indonesian rupiah as jitters about hostilities in the Middle East eased. The benchmark Stock Exchange of Thailand Index traded 0.5 per cent higher after the decision. Last week's fracture in the ruling coalition adds to risks for South-east Asia's economy, just as the government holds talks to avert a threatened 36 per cent tariff on exports to the US. Continued attacks in Israel and Iran are also spurring global oil prices higher, posing a risk to Thailand, which imports for its fuel needs. Also underlining the improved full-year outlook is the BOT's view that the trade war could be less severe. The BOT's base case assumes an 18 per cent tariff rate will be applied to Thailand – half the rate announced in April – and 10 per cent for other countries. Still, consumption is also softening, the number of foreign tourists is on the decline, and businesses are facing challenges from cheaper imports, the BOT said. UBS Group has downgraded Thai stocks to neutral from overweight on concerns over policy direction and investor sentiment. Meanwhile, price pressures are seen remaining modest. Headline inflation is estimated to remain low at 0.5 per cent this year and 0.8 per cent in 2026, below the central bank's 1 per cent to 3 per cent target. The BOT also sees the core gauge coming in at 1 per cent in 2025 and 0.9% in 2026. 'The Committee assesses that the economic outlook remains highly uncertain,' it said. 'It stands ready to adjust monetary policy as appropriate in response to future trends and risks concerning both the economy and inflation.' Thailand remains one of South-east Asia's economic laggards, though exports surged the most since early 2022 in May as companies rushed to stockpile goods before US tariffs hit. Authorities have begun long-delayed talks with the US in a bid to reduce the Trump administration's threatened levy. Today's decision is one of the last under Governor Sethaput Suthiwartnarueput, who will complete his five-year term on Sept 30. An independent selection panel shortlisted Vitai Ratanakorn, president of the Government Savings Bank, and BOT Deputy Governor Roong Mallikamas from a list of six applicants who were interviewed on Tuesday. BLOOMBERG
CNA
a day ago
- Business
- CNA
Thailand holds rates, but more easing expected amid tariff risks, political tensions
BANGKOK :Thailand's central bank left its key interest rate unchanged on Wednesday, as expected, saying it was saving some policy ammunition if needed to support an economy expected to slow amid trade uncertainty and renewed domestic political turmoil. The central bank said growth was stronger than expected in the first half of the year, in part because of frontloading of export orders to beat U.S. tariffs, but noted the outlook was uncertain and it was ready to cut rates as needed. The Bank of Thailand's monetary policy committee voted 6 to 1 to keep the one-day repurchase rate at 1.75 per cent, the lowest in two years. The BOT said its rate cuts in February and April were providing some support to the economy. "The Thai economy is projected to slow down going forward, as a result of increasing risks to merchandise exports stemming from U.S. trade policies as well as geopolitics and domestic factors," it said in a statement. The stronger-than-expected start to the year saw the BOT lift its central-case growth forecast to 2.3 per cent for 2025, almost matching last year's 2.5 per cent and more optimistic than some market analysts. Assistant Governor Sakkapop Panyanukul told a press conference that the committee was ready to "react if the economy is slower than expected." "The BOT's tone remains dovish, pointing to room for further accommodation in the coming months," said Lavanya Venkateswaran, senior ASEAN economist at OCBC. "Our baseline is for another 25 basis point cut in the second half as downside risks to growth remain rife from perceived domestic political uncertainties and U.S. tariff risks," she said. Capital Economics said it expected 50 basis points of rates cuts before the end of the year. Thailand faces a 36 per cent U.S. tariff on its exports, a key driver of growth, if it fails to negotiate a reduction before a moratorium expires in July. A tariff of 10 per cent has been set for most nations while the moratorium is in place. The baht was largely unchanged against the U.S. dollar after the decision to hold rates steady, which had been expected by 21 of 33 economists in a Reuters poll. Thailand's economy has struggled with weak consumption, soaring household debt, slowing tourism, trade uncertainty and potentially steep U.S. tariffs. The BOT also lowered its forecast for tourist arrivals, a strng domestic growth driver, to 35 million this year. Adding to the challenges is a fresh round of political turmoil that could bring down Prime Minister Paetongtarn Shinawatra or the coalition government led by her Pheu Thai party. Sakkapop said that the political issues had not been factored into its forecasts, and the central bank would wait to see developments.
New Straits Times
a day ago
- Business
- New Straits Times
Bank of Thailand keeps benchmark rate at 1.75pct
KUALA LUMPUR: The following is a statement from the Bank of Thailand after its monetary policy committee voted 6 to 1 to hold the key interest rate steady at 1.75 per cent on Wednesday, as expected. Sakkapop Panyanukul, Secretary of the Monetary Policy Committee, announced the outcome of the meeting on June 25, 2025, as follows: The Committee voted 6 to 1 to maintain the policy rate at 1.75 per cent. One member voted to cut the policy rate by 0.25 percentage point from 1.75 to 1.50 per cent. The Thai economy expanded more than anticipated in the first half of 2025 owing to manufacturing production and front-loading exports. Nevertheless, the economy is projected to slow down going forward, due to increasing risks to merchandise exports stemming from US trade policies, as well as geopolitics and domestic factors. Meanwhile, headline inflation remains subdued due to supply-side factors. Credit growth is slowing down partly because of declining loan demand in some groups and rising credit risks. The Committee deems that monetary policy should be accommodative to support the economy going forward. Previous policy rate cuts have already provided some cushion against prevailing risks. However, most committee members voted to maintain the policy rate at this meeting, citing the importance of timing and the effectiveness of monetary policy amid high uncertainties and limited policy space. One committee member voted to cut the policy rate by 0.25 percentage point to alleviate interest rate burdens and support those affected by the weakening economic outlook. The Thai economy is projected to expand by 2.30 per cent in 2025 and 1.70 per cent in 2026. This year's growth is partly due to a stronger-than-expected outturn in the first quarter and positive leading economic indicators in the second quarter. Export growth, particularly in electronics and front-loaded goods to the US, has supported manufacturing and related service sectors. However, in the second half of 2025, the economy is expected to slow as merchandise exports face headwinds from US tariffs. Private consumption is also forecast to moderate in line with weakening income and consumer confidence. The projected number of tourist arrivals has been revised down, although tourism receipts continue to grow due to higher spending per visitor. Certain business sectors are under pressure from intensified import competition and shifting consumer behaviour. Headline inflation is forecast to remain subdued at 0.50 per cent in 2025 and 0.80 per cent in 2026, due to energy and fresh food prices. Core inflation is projected at 1.00 per cent in 2025 and 0.90 per cent in 2026. Despite low headline inflation, primarily caused by supply-side factors, there has not been a broad-based decline in prices. Medium-term inflation expectations remain well-anchored within the target range. Looking ahead, it is necessary to monitor geopolitical risks that could drive up global energy prices. Overall credit growth remains negative. Financial institutions are cautious in extending credit, especially to SMEs and low-income households. Part of the credit contraction stems from subdued business demand and increased loan repayments. Credit quality has continued to deteriorate, particularly in SME and housing loans. Interest rates in money markets and financial institutions have declined in line with the recent policy rate cuts. The baht has appreciated slightly against the US dollar, driven by external factors and in line with regional currencies. The Committee will continue to closely monitor credit growth and credit quality, which could have implications for economic activity. The prevailing monetary policy framework seeks to maintain price stability, support sustainable growth, and preserve financial stability. The Committee assesses the economic outlook to remain highly uncertain and stands ready to adjust monetary policy going forward to align with the economic and inflation outlook and associated risks.
