Interest Rate Expectation Index for June 2020
Results from the Interest Rate Expectation Index show the market expects that the policy interest rate will likely be maintained at 0.5% at the Bank of Thailand’s Monetary Policy Committee (MPC) meeting in June. Meanwhile, yields on 5-year government bonds and 10-year government bonds are likely to remain unchanged in the next eleven weeks as the MPC had just lowered the interest rate at their previous meeting and will likely evaluate economic conditions after the easing of the lockdown. However, yields may increase in the second half of the year after the issuance of government bonds for use in economic stimulus measures.
Ariya Tiranaprakij, Deputy Managing Director of the Thai Bond Market Association, commented on the Interest Rate Expectation Index for June 2020 with the following details:
- The Interest Rate Expectation Index for the next Bank of Thailand MPC meeting being held in May increased to 43, higher than the previous report and rising into the unchanged range. This reflects the market sentiment that the MPC meeting in June should maintain the policy interest rate at 5 percent due to the negative economic growth, the trending decline in global interest rates, and the net capital outflow of foreign investments.
- The Interest Rate Expectation Indices for 5-Year and 10-Year Government Bonds through the Bank of Thailand MPC meeting in August 2020 (about 11 weeks out) are still within the index’ unchanged range. These levels reflect the market view that 5-year and 10-year bond yields will remain stable at the 76% and 1.17% levels respectively (as of the survey date of May 21, 2020). Factors supporting these outlooks include demand in the bond market, the slowdown of the domestic economic growth rate, trends in global interest rates, and the supply of government bonds which may increase from the issuance of bonds to stimulate the economy.