The Bank of Thailand will keep its one-day repo rate unchanged at 2.50% and through the first quarter of next year, according to a Reuters poll, as policymakers balance growth, inflation and ongoing political instability.
Rates traders are more dovish though, attaching a roughly 80% probability to a quarter-point cut in December. Inflation is running below target and the government has repeatedly called for interest rates to be cut, but central bank governor Sethaput Suthiwartnarueput has so far resisted.
Figures on Tuesday showed that the Thai economy expanded in the second quarter faster than economists had expected, with annual growth reaching 2.3% against estimates of 2.1%. First quarter growth was revised up too.
Bank Indonesia, meanwhile, is also widely expected to keep its benchmark seven-day repo rate on hold at 6.25%, then cut borrowing costs in the fourth quarter after the Fed’s easing cycle gets underway, according to a Reuters poll.
Annual inflation is barely 2.00%, the lowest in two and a half years, but policymakers are wary that easing policy too soon could weigh heavily on the rupiah.
Asian currencies are generally weaker against the dollar so far this year but have recovered most of these losses in recent weeks. The Thai baht is even up slightly year to date.
