Bank of Thailand cuts its interest rate further

Posted in Business,General,Government,Guide,News January 15, 2009

Owing to the global recession and the long political unrest in the country, Bank of Thailand has cut its interest rate more than economists expected for a second month. It has lowered its one-day bond repurchase rate by three-quarters of a percentage point to 2 percent.

“The cuts will have to continue,” said Isara Ordeedolchest, an economist at KTB Securities Ltd. in Bangkok who predicted today’s 75-basis point reduction. “The economic numbers are coming down on every front and inflation is slowing sharply.”

The baht was little changed at 34.90 per dollar. Two-year government bonds, which have lost 86 basis points since the central bank last lowered borrowing costs, may extend gains on the prospect of more rate cuts, according to DBS Holdings Ltd. Bond yields move inversely to price.

“We still have lots of ammunition,” Duangmanee Vongpradhip, a Bank of Thailand assistant governor, told a press briefing. “Domestic demand continued to soften, both in consumption and investment, partly as a result of fragile sentiment. We can be less aggressive now as we see fiscal measures in place.”

The following is a chronology of interest rate levels since 2001:

1-day repo rate (pct):

Jan. 14, 2009                                2.00

Dec. 3 2008-Jan. 14, 2009           2.75

Aug. 27-Dec 3, 2008                   3.75

Jul. 16-Aug. 27, 2008                 3.50

Jul. 18, 2007-Jul. 16, 2008         3.25

May. 23-Jul 18, 2007                  3.50

Apr. 11-May 23, 2007                4.00

Feb. 28-Apr. 11, 2007               4.50

Jan. 17-Feb. 28, 2007                 4.75

Jan. 17 – Central bank switches to 1-day

repo rate for its policy benchmark

14-day repo rate (pct):

June 7, 2006-Jan. 17, 2007          5.00

Apr. 10-June 7, 2006                  4.75

Mar. 8-Apr 10, 2006                   4.50

Jan. 18-Mar. 8, 2006                   4.25

Dec. 14, 2005-Jan. 18, 2006       4.00

Oct. 19-Dec 14, 2005                3.75

Sep. 7-Oct. 19, 2005                  3.25

Jul. 20-Sep. 7, 2005                   2.75

Jun. 9-Jul. 20, 2005                    2.50

Mar. 2-Jun. 9, 2005                    2.25

Dec. 15, 2004-Mar. 2, 2005       2.00

Oct. 20-Dec. 15, 2004               1.75

Aug. 25-Oct. 20, 2004               1.50

Jun. 27, 2003-Aug. 25, 2004      1.25

Nov. 19, 2002-Jun. 27, 2003      1.75

Jan. 21-Nov. 19, 2002                 2.00

Dec. 25, 2001-Jan. 21, 2002       2.25

Jun. 8-Dec. 25, 2001                   2.50

Prior to Jun. 8, 2001                  1.50

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