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Bank of Thailand Cuts Benchmark Rate to 1% the Lowest in 20 Years

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The Bank of Thailand has announced it has cut its policy rate to 1 percent to cope with economic woes, including the new coronavirus outbreak. The Central Banks cut in its policy rate has made it the lowest since 2000.

The Monetary Policy Committee (MPC) of the Bank of Thailand (BOT) decided to lower the benchmark rate on Wednesday.

MPC Secretary Titanun Mallikamas said the committee members voted unanimously to cut the policy rate to 1.00 percent effective immediately.

The MPC viewed that the economy faced downside risks from the coronavirus outbreak. The delayed budget disbursement and the drought that could also be more severe than previously assessed, Titinun said.

Trade tensions and geopolitical risks also contributed to high uncertainty affecting Thai economic outlook this year, added Titinun.

The impacts of the coronavirus outbreak would be significant in the first half of this year. It has affected the country’s tourism industry, leading the Bank of Thailand to predict much lower GDP growth.

Meanwhile, the Siam Commercial Bank’s Economic Intelligence Center (EIC) has offered the most pessimistic view yet of Thailand’s 2020 economic growth. Slashing its forecast from 2.7% to 2.1% after taking into account the coronavirus epidemic and the delayed fiscal budget.

The biggest impact from the outbreak of the novel coronavirus on Thailand’s tourism sector will be seen this month and next, the research unit told the Bangkok Post.

The number of foreign travellers is estimated to drop for three straight months. In the worst-case assumption six months, resulting in a contraction of 2.5%, 4.6% or 8.1% in 2020, the EIC said.

The EIC’s latest forecast is also far below policymakers’ views. The Bank of Thailand and the Fiscal Policy Office predict GDP growth of 2.8% this year.