Bank of Thailand likely to loosen policy by year-end

The Bank of Thailand (BoT) kept its policy rate at 3.0% today, as was widely expected. While Thailand’s economy bounced back strongly in Q1 from last year’s flood-induced slump, the focus has now switched to the deteriorating global outlook and rising political tensions at home. Given Thailand’s export-led growth model and our view that the global economy will continue to struggle, we have pencilled in a 25bp rate cut in Q4.