Bank Of Thailand will follow all the others… and prepares an interest rate cut

The Bank of Thailand has signalled its readiness to reduce the policy interest rate but a decision on the matter will be made after the National Economic and Social Development Board announces the country’s third quarter economic condition in mid-November.

Bank of Thailand Governor Tarisa Watanagase stated that the agency will lower the interest rate if the economic indicators are negative because the country is facing risks to economic expansion despite the fact that inflationary pressure has reduced.

Tarisa reiterated that the meeting of the Monetary Policy Committee remains unchanged, so the panel will decide on the interest rate movement on December 3. (TOC)

That’s the good point with the BOT : they follow, quietly, like a metronome, like a good dog.

😉

It’s printed : GDP for Q3 will be bad (= enough to justify a rate cut without loosing face). It’s a certainty. See you november 24.

Repurchase rate is currently at 3,75 % (BOT increased end of august, from 3,50).

The entire world has started an inane run toward zero interest rates, free money, to “save the global economy”, to curb the “global crisis”. All the central banks are on this path. Just the pace can be different here or there.

So why not the BOT ? Indeed.

So let’s cut. Yeah, let’s cut.

It will have zero effect, it won’t motivate depressed businesses or individuals to invest more, to buy more… but cut, cut, cut we need to cut. The politicians will be happy…

In Cut We Believe. Yes We Can (cut). 😉

[I invite you to read this superb piece by the guru Mike Shedlock : inflation, stagflation, desinflation, deflation :]
http://globaleconomicanalysis.blogspot.com/2008/11/industrial-bond-yields-strongly-support.html

UPDATE NOVEMBER 12
Another hint…

The Bank of Thailand (BoT) has no plans to hold an urgent meeting to handle the financial crisis but is ready to loosen up the interest rate, BoT deputy governor Atchana Waiquamdee said on Wednesday. (Bangkok Post)

UPDATE NOVEMBER 18
Another hint. She should have already the figures for GDP Q3 (publication on november 24)… Therefore : less than expected and interest rates cut scheduled for december 3.

The Bank of Thailand (BoT) will likely adjust its economic forecast and key economic indicators and cut the policy interest rate because of the grave global economic crisis, BoT governor Tarisa Watanagase said on Tuesday. (Bangkok Post)

8 Responses to “Bank Of Thailand will follow all the others… and prepares an interest rate cut”


  1. 1 tj 11 November 2008 at 10:08 am

    Thailand …..the New Hub of Cuts

    A lot can happen in 3 weeks, looking forward to a weaker baht

  2. 2 FDL 11 November 2008 at 11:22 am

    Will the world-wide rate cutting, government mega-loans accommodating, near Zimbabwe-like-frenzy money inflating, being led by the United States of Americreditcardholders spark the average consumer to shop again?

    But what if the consumer decide on to hold on to his depleted cashbox and won’t spend, or spend only on necessities (the most likely scenario)?

    More rate-cutting, more government mega-lending and more Zimbabwe-like money inflating?

    End result will be a global tsunami of hyperinflation that will follow the initial ongoing deflation from the crisis . . . but this tsunami will be the real mother of all hyperinflation.

  3. 3 ThaiCrisis 11 November 2008 at 11:36 am

    That’s the quadrillion dollars question. 😉

    Deflation, inflation… It’s impossible to know for a very good reason : the scale and the nature of the problems are totally unprecedent.

    Therefore, it’s difficult to infere by the books, and/or with history.

    We are lost. Totally lost.

    For every reasonable argument toward the left, you can find an another perfectly reasonable counter argument toward the right. Deflation, inflation. Inflation, deflation.

    And we could even say that this binary view is not correct. Indeed, some people foresee both… deflation AND inflation. 😉

    That’s the scary point : past references, theories are unable to really help us.

    Too many factors, too many variables, too many interlinks…

    Personally, I feel totally, utterly, desesperatly lost.

    I’ve got the horrible fealing that this situation is like the problem of the unintelligibility of very large numbers : our human brain just can’t cope with the fact (for instance) that our universe contains billions of galaxies, and galaxies contains billions of stars, and each stars can have a few planets circling around…

    Or maybe… I need badly some vacations, some rest ? 😉

    In the current situation, the only reasonable position could be… the Pascal’s Wager.

    I invite you to read this superb piece by the guru Mike Shedlock : inflation, stagflation, desinflation, deflation :
    http://globaleconomicanalysis.blogspot.com/2008/11/industrial-bond-yields-strongly-support.html

  4. 4 Bkk Businessman 26 November 2008 at 2:06 pm

    It is germane to remember that a central bankers role is, first and foremost, to preserve and promote its currency. In order to achieve this central bankers resort to ‘leaking’ likely future moves in policy rates. This primes the market and creates the impression that they are in control.

    People like to believe that a central bank governor is in control and able to preserve the value of the currency they represent for if the masses don’t believe that why would they want to accumulate that currency?

    I, for one, am glad to see that the BOT is priming the market ready for its next move.

    I’m also glad to see that governments around the world are resorting to fiscal stimulus as well as monetary stimulus. As Mervyn King, governor of the Bank of England pointed out recently, this is the worst banking crisis since the second world war (Great Depression), so all policy makers MUST do everything within their power to stave off another economic depression, perhaps even worse than the Great Depression and possibly even leading to world war three. If you ask me whether I would prefer hyper-inflation or world war three, I know what my answer would be, do you know what yours would be?

  5. 5 ThaiCrisis 26 November 2008 at 2:13 pm

    Very simple. Like Churchill said : you choose hyperinflation. You’ll get war. 😉

    It’s not really accurate to oppose those 2 ideas.

    Because history showed us that one can lead to the second (Weimar Republic…).

    Anyway, what those grand stimulus plans, all those trillions of USD casted away, will achieve ? Nothing. Juts giving some morphine to the patient. Agony will last longer.

    Is that a good ? I seriously doubt it.

  6. 6 Bkk Businessman 29 November 2008 at 12:40 pm

    Of course, hyperinflation of the type currently under way in Zimbabwe is in no-ones interest. Whilst I do believe that Western central bankers will live with higher inflation (primarily in order to depreciate the enormous public and private sector debts that have been/will be accumulated), I do not think they will live with hyperinflation, nor do I think they will have to. I believe that we will ultimately see Asia currencies appreciate verses Western currencies. This won’t be the only transmission mechanism for a transfer of wealth from the West to the East, but it will, in my view, certainly be an important one. The simple fact is that the trade and current account imbalances have to be redressed. This can only happen from greater consumption in the East (or dramatically reduced consumption in the West!). Of course, one way of achieving this is to make Western consumers poorer and Eastern ones richer. This can be effected through both inflation and depreciation of Western currencies. We’ve already seen some of both of these phenomena, but there’s more medicine to be taken yet.

    If Western governments fail to stimulate their economies using tax payers’ money now, those economies could very well fall into severe recessions that would lead to massive unemployment, civil unrest and subject millions of people to abject misery. Would you like that for your family?

    Whatever form this adjustment takes it will surely be painful for all of us; why make it more painful than it has to be?

  7. 7 ThaiCrisis 29 November 2008 at 12:53 pm

    Because a little bit more morphine has NEVER cured a sick man.

    Eventhough I agree with your first part (asian currencies will appreciate on the long term)… I don’t follow you on the “stimulation” part.

    Yes, western countries will (and have to) be poorer. And it’s not by stimulating “consumption”, with money we don’t have (what you call “tax payer” money… but a money that doesn’t exist yet, that they would have to take in the future) that the situation will improve.

    Buying more junk and stuff from China won’t help us.

    It’s a non sense. We saw it on Q2 in the US. They send a check to every living organisms in the country… For what ? For an artificial boost on GDP Q2. Great.

    And 3 months after it was the end of the world with the collapse of Lehman… And at the same moment, the trade surplus of China increased at an amazing pace… !

    Those suckers used their checks to :
    -buy gasoline (money going out to oil producers)
    -and buy more chinese stuff

    Bravo ! A great achievement from an economic point of view !

    And now all the clowns of the planet want to play the same game : stimulation, more ! It’s becoming grotesque.

    It’s a DILDO way of thinking. It’s the level zero of thinking. It’s freaking frightening.

    “I’M MAD AS HELL !”

    1976 ! Can you imagine ? And it could have been filmed… yesterday. So true !

  8. 8 Bkk Businessman 30 November 2008 at 4:32 am

    I may not have made my second point clear. When I say consumption I’m not for one minute proposing that we throw taxpayer money (yes, future tax payer money) at buying junk from China, although some of that will inevitably happen. I’m suggesting public sector consumption/investment. Things like infrastructure development (upgrading railways for example), acquisition of social housing (at substantial discounts), improving telecommunications infrastructure, grants and tax stimulus for new businesses and other things of this nature.

    Yes, of course, some of that fiscal stimulus will end up being spent on junk from China (compare what is happening in Thailand [people getting killed and injured standing-up for their political convictions] and the US [people being injured and killed tearing the doors off shops in the rush to buy junk from China!]). All I am saying is that if the western economies are not stimulated by these means a global depression on a scale much worse than the Great Depression is a very real possibility.

    If we were to follow your plan I believe we would see businesses in the west shutting down on mass as demand shrivelled. This would lead to massive increases in unemployment (costing the state huge amounts of tax payer money by the way), consumer confidence disappearing with fear taking its place, a further reduction in consumption and before you know it you are in a vicious cycle of business closures, resultant unemployment leading to further destruction of demand and on to further business closures. Is that what you are suggesting?


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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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