BoT: Further easing looks likely – UOB

In light of the recent results from inflation figures in the country, the Bank of Thailand (BoT) could reduce rates further in the next meetings, suggested Barnabas Gan, Economist at UOB Group.

Key Quotes

“Thailand’s consumer prices contracted for the second straight month by 2.99% y/y (-2.03% m/m sa) in April 2020, marking the deepest deflation print since July 2009 (-4.35% y/y). Core prices also decelerated to +0.41% y/y in April 2020, the slowest pace since March 2020 (+0.35% y/y).”

“The decline in consumer prices was underpinned by two key drivers: the fall in global energy prices and non-food & beverage items. The latter was likely led by Thailand’s state of emergency announcement over the period 27 March to 31 May.”

“Given the impending recession in 2020, April’s deflation print could be a very persuasive reason for central bank policy-makers to consider further accommodative measures. Although monetary policy space remains extremely limited at this juncture, we still pencil in a 25bps rate cut in 2Q20, followed by another 25bps rate cut in 3Q20 to bring its benchmark rate to an unprecedented low of 0.25%.”