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

Commenting on the Monetary Policy Committee’s latest decision to adjust down the policy interest rate to 2 percent per annum, BoT Spokesperson Roong Mallikamas pointed out that the change has already been foreseen by the capital market. Once the adjustment was made, she claimed that commercial banks could react in no time by lowering their interest rates accordingly.

Roong said the exchange rates have experienced no fluctuations while the sales of bonds are still stable. In the meantime, limited impacts are expected from the Fed’s quantitative easing (QE) tapering policy as well as the slowdown in Chinese economic growth, thanks to the strong fundamentals of the Thai economy.

However, the central bank spokesperson noted that there is a signal of a real estate slump, resulting from shrinking 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 relaxed monetary policy is still necessary, adding that further reduction of the benchmark rate is possible.-VNA