Bank of Thailand shocks markets with 25bps cut

The current rate is 2.75%, marking the second rate slash this year.

According to BBVA Research, the Bank of Thailand (BOT) surprised markets today with a 25bps cut to 2.75%, the second cut this year.

Here's more from BBVA Research:

Echoing themes of the Bank of Korea and Reserve Bank of Australia, both of whom have cut rates in the past month, the BOT mentioned weaker demand from China along with rising risks from the “fiscal cliff” in the US and challenges in the EU in resolving the euro crisis.

The BOT noted in its statement that, “with upside risk to inflation contained, the majority of MPC members deemed that monetary policy easing was warranted to shore up domestic demand in the period ahead and ward off the potential negative impact from the global economy.”

Additionally, investment is moderating as flood-related expenditures are tapering off. With growth expected to register about 5.0% y/y this year and inflation expected to be about 3.3% y/y, with a similar outlook for 2013, we do not expect further rate cuts in Thailand for the time being, although the chances for a cut in the last meeting this year, at the end of November, are rising.