Bank of Thailand keeps its key rate at 2.50%

The Bank of Thailand (BOT) has announced that it will maintain its benchmark interest rate at 2.50% for the fifth consecutive time, in line with market expectations. This decision was made despite the current economic slowdown and the ongoing uncertainty surrounding fiscal policies following the removal of the prime minister by a court. A survey of 27 economists found that only three predicted a rate cut this week, while the majority anticipated no change. The median forecast indicates that a rate cut is not anticipated until the second quarter of 2025. Previously, the BOT has increased its key interest rate by 200 basis points, reaching the current level of 2.50%, and has maintained this level since then. Other central banks, including those in the Philippines and New Zealand, have initiated a policy of easing. The BOT's next policy review is scheduled for 16 October, at which point it is expected that inflation will have returned to its target range of 1% to 3% by the end of the year.

https://internasional.kontan.co.id/news/bank-sentral-thailand-pertahankan-suku-bunga-acuan-di-250
 

Reading the Fed's Interest Rate Cut Direction Ahead of Jerome Powell's Speech

It is anticipated that the Federal Reserve will reduce its benchmark interest rate in September 2024, in response to inflation approaching the target set by the central bank. However, there is a growing concern about the rising unemployment rate as a result of employers reducing their hiring pace. The next rate cut will depend on whether companies continue to hire workers. In his speech at the annual conference of central bankers in Wyoming, Fed Chair Jerome Powell is expected to provide insight into the Fed's view of the economy. A reduction in interest rates will benefit consumers seeking car loans, mortgages and other consumer goods. In anticipation of the anticipated cut, mortgage rates have already started to fall. Economists anticipate that the labour market will contribute to a deceleration in economic growth. The Federal Reserve is currently placing greater emphasis on labour market conditions than on inflation.

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Beware, Thailand's Economy is Close to Crisis

Thailand is on the brink of an economic crisis, with a decline in exports and a lack of competitiveness in the manufacturing sector posing significant challenges. The acting Thai Finance Minister, Pichai Chunhavajira, highlighted concerns about the manufacturing sector's inability to meet market demand, noting that the country is facing challenges in competing and adapting in a timely manner. Despite a 2.3% increase in the second quarter of 2024 compared to the previous quarter's 1.6% growth, there has been a slowdown in quarterly growth. The second quarter expanded by only 0.8% compared to 1.2% in the first quarter. The Ministry of Finance forecasts that Thailand's economic growth in 2024 will be 2.7%, following a growth rate of 1.9% in the previous year. This is below the growth rates of other countries in the region. The central bank is expected to maintain its current interest rate, which is already at its highest level in over a decade, for its fifth consecutive meeting.

https://internasional.kontan.co.id/news/waspada-perekonomian-thailand-hampir-mengalami-krisis