Thai Rates cut to 2.5%

“Against the backdrop of continued financial stability concerns, the Monetary Policy Committee (MPC) thus voted unanimously to reduce the policy rate by 25 basis points from 2.75% to 2.5% per year,” the… 

Source: Bangkok Post

Argh! Yes I was surprised by the rate cut, we could see the bond market was expecting it, however I was hoping that the BOT would hold off on this for a while, ok time to stop pretending to be a central banker and lets just look @ what may happen next.

  • Baht will weaken short term – (bond & equity market sell offs)
  • Exporters rejoice (wouldn’t be surprised to see 2Q13 & 3Q13 numbers looking better on average) 
  • Cost of funding decreases – Great for any low margin business that relies on short term financing
  • Banks will be affected as their NIM’s will decrease slightly
  • Asset prices should continue to increase  over time. 
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