Why Thailand's monetary policy is still deemed 'accommodative'

It's a stark contrast from last year.

According to DBS, BOT Governor Prasarn has reiterated that the current monetary policy stance remains accommodative. Indeed, it is very accommodative, especially when compared to where it was at this time last year.

Here's more from DBS:

Since Apr13, the THB NEER has fallen by about 8% while the BOT policy rate is 75bps lower. Back in May13, the rate cut was partly done to ease further pressure on the THB to appreciate. And we are of course in a completely different environment right now.

If anything, presumably a stronger baht may be useful to boost confidence in the domestic economy. Remember that the May13 rate cut was also done before political troubles started to surface in Oct/Nov13. 

The impact from the two rate cuts done in Nov13 and Mar14 is still negligible so far. This does not mean that there won’t be any impact at all from those two rate cuts. Loan growth has been falling because demand is low amidst the political uncertainties.

And the military government is set to roll out growth-boosting policies in the coming months. Against this backdrop, the BOT is likely to be happy to take a backseat for now. The policy rate may be kept steady at 2% for longer than we had previously expected but further cuts are highly unlikely.

Meanwhile, it is also important to monitor the central bank’s outlook. 2014 GDP growth forecast is set to be revised down again, presumably to 2% or lower. But it is the 2015 GDP growth number that is more interesting to watch. For it provides some hints of the extent of trust that the central bank has on the current military government’s efficacy in managing the economy.