Thailand's Murky Monetary Policy

August 2003
Asia Monitor: South East Asia Monitor Volume 1;Aug2003, Vol. 14 Issue 8, p1
Country Report
Country Report
This article focuses on the monetary policy of Thailand, as of August 1, 2003. Thailand's policymakers appear to have reverted back to a stance that places overriding importance on the stability of the baht, leaving economic fundamentals on the sidelines. In a monetary policy committee meeting the Thai central bank reduced its key 14-day repo rate by 50 basis points to 1.25 percent. The move came just two days after policymakers in the U.S. cut the federal funds rate by 25 basis points to just 1.0 percent. The rational behind the Bank of Thailand's move was to reduce the interest-rate differential between Thailand and the U.S. to avoid destabilizing capital inflows. Deflation concerns were also cited by the central bank Governor Pridiyathorn Devakula as a reason behind the interest rate cut.


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