Interest Rate Expectation Index for August 2021
The Index reflects market’s expectation that Bank of Thailand’s Monetary Policy Committee (MPC) will keep its policy rate unchanged at 0.5% at its meeting in August. Yields of 5-year and 10-year government bonds at the end of the third quarter are expected to remain unchanged from the date that this survey was conducted (16 July 2021). More number of respondents anticipated that yields may rise as growing number of vaccinated people is likely to help accelerate the reopening. As a result, the U.S. Treasury yields are likely to rise, which could trigger yields of the Thai government bonds to follow suit. However, some survey respondents view that yields of the Thai government bonds, on contrary, may fall following the government’s growing financial relief to help those impacted from COVID-19 spread.
Ariya Tiranaprakij, Deputy Managing Director of the Thai Bond Market Association, revealed highlights from Interest Rate Expectation Index for August 2021 as follows;
- The Interest Rate Expectation Index for August on MPC’s policy rate remains unchanged at 47 from the previous survey and remains in “Unchanged” zone. It reads that the MPC is expected to keep its policy rate steady at 0.5% at its meeting in August following the slower-than-expected economic recovery. In addition, the Bank of Thailand has put in place financial measures to support SMEs and ease household debt burden, therefore, the necessity to cut its policy rate further is narrowed.
- The Interest Rate Expectation Index on yields of 5-year and 10-year government bonds at the end of the third quarter remains in “Unchanged” zone. The index read parred at the same level from the previous survey. Greater number of respondents expected yields to rise while some viewed the opposite. This reflects that the yields of 5-year and 10-year government bonds are likely to remain unchanged from 82% and 1.66% respectively as of the survey date (16 July 2021). Main factors anticipated include demand and supply in the debt market, global interest rate trend as well as the local economy.