BANGKOK: Thailand's central bank is expected to leave its policy interest rate steady again on Wednesday, even though the economy is still sputtering 10 months after the army took power to end prolonged political tension.
Sixteen of 21 economists in a Reuters poll predict the one-day repurchase rate will be left at 2.0 percent at Wednesday's monetary policy review.
The other five expect a 25 basis-point cut, citing the weak economic recovery, falling prices and a stronger baht.
There is no consensus on the longer-term rate direction, though nearly 50 percent of poll respondents forecast a rate cut by June.
HSBC economist Nalin Chutichotitham sees a cut on Wednesday, as latest data shows that the recovery is still weak. "It might be better to deliver a rate cut sooner than later," she said. Gundy Cahyadi of DBS Bank in Singapore expects a cut at the next policy meeting, on April 29, rather than on Wednesday.
"Slower-than-expected GDP growth coupled with falling inflation may leave the BOT with little choice but to trim its interest rate again," he said.
Economist Peerawat Samranchit of TMB Bank in Bangkok predicts no rate change all year. "We expect inflation to start increasing in Q2 as oil prices seem to have bottomed out. Also, the economy should recover in 2015," he said.
HOUSEHOLD DEBT HIGH
Southeast Asia's second-largest economy grew only 0.7 percent last year, the worst result since flood-hit 2011.
Protests paralysed government work in the first half of the year, and even though the May coup restored some stability, both of Thailand's main growth engines - exports and consumption - remained stalled in the second half.
Consumption was crimped by record-high household debt, which is one reason the BOT has held the policy rate for a year.
At the last meeting, in January, the monetary policy committee voted 5-2 to hold the rate, with the two dissenters wanting a cut.
Last month, Deputy BOT Governor Paiboon Kittisrikangwan said the policy rate was already low and any cut might not spur demand for loans much.
The BOT will review its 4 percent economic growth forecast for 2015 on Wednesday but may not disclose the new projection until March 20, when its quarterly economic forecasts are due.
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