The Bank of Thailand (BoT) has confirmed that the recent reduction ofthe benchmark rate by 0.25 percent is yet to create any substantialeffects on the capital market as it is within the expectation offinancial institutions.

Commenting on the Monetary PolicyCommittee’s latest decision to adjust down the policy interest rate to 2percent per annum, BoT Spokesperson Roong Mallikamas pointed out thatthe change has already been foreseen by the capital market. Once theadjustment was made, she claimed that commercial banks could react in notime by lowering their interest rates accordingly.

Roong saidthe exchange rates have experienced no fluctuations while the sales ofbonds are still stable. In the meantime, limited impacts are expectedfrom the Fed’s quantitative easing (QE) tapering policy as well as theslowdown in Chinese economic growth, thanks to the strong fundamentalsof the Thai economy.

However, the central bank spokespersonnoted that there is a signal of a real estate slump, resulting fromshrinking demand among home buyers and fewer openings of new projects.Core inflation is also rising from the higher prices of food and energy,though in a gradual manner.

Roong concluded that a relaxedmonetary policy is still necessary, adding that further reduction of thebenchmark rate is possible.-VNA