Interest Rate Expectation Index for August 2017
“”Results from the Interest Rate Expectation Index show that interest rates are expected to be stable at 1.50%, while 5-year and 10-year government bond yields are likely to rise. But confidence reflected in this month’s index was somewhat lower than the previous forecast, with the main factors affecting it being supply in the long-term bond market and US policy rate hikes,” commented Mr. Surat Chiracharasporn, Head of Bond Pricing and Product Development, Thai Bond Market Association (ThaiBMA), on the release of the Interest Rate Expectation Index for August 2017.
The Interest Rate Expectation Index for the Bank of Thailand’s Monetary Policy Committee (MPC) meeting in August stands at 49, reflecting that the market remains confident that the MPC policy rate will be maintained at 1.50%, due to two primary factors: 1) inflation is expected to remain low under the policy framework; and 2) the trend of gradual economic growth in Thailand continues.
The Interest Rate Expectation Indices for 5-year and 10-year Thai government bonds through the next MPC meeting in September (the next nine weeks) are at 74 and 75 respectively, which are lower than the previous levels of 84 and 83. This indicates that the bond market is less confident that yields on both tiers of government bonds will rise from their current levels, owing to: 1) growing supply in the long-term debt market; and 2) continuing US policy rate hikes.