Real score behind Thailand's double whammy in policy rate cut

A total of 50bps has been slashed from the rate.

According to DBS, since the beginning of this year, the central bank (BoT) has cut the policy rate twice (25bps in January and another 25bps in October).

Here's more from DBS:

Barring a significant deterioration in growth outlook, we think that further monetary policy easing is unlikely. Over the last few months, external headwinds have certainly taken a toll on growth with headline GDP dipping to 3% YoY in 3Q.

Recent manufacturing and export data have also been uninspiring as the post-flood pent up demand abated. However, domestic economic indicators are still holding up very well.

Private consumption and gross fixed capital formation rose by 6% YoY and 15.5% YoY respectively in 3Q. Coupled with accelerated government consumption, the domestic economy has been able to offset part of the external drag.

With loan growth still robust, further monetary easing may not be needed. Moreover, BoT is likely to keep an eye on the upcoming minimum wage hikes in early 2013 which could stoke inflation expectations.

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