Thailand Central Bank Watch BoT is likely to keep policy rate at 1.75%

          * The Bank of Thailand (BoT) is likely to stand pat on 29 April as it assesses the March rate cut, and further fiscal stimulus 
          * Exports softened further, leading to calls for weaker THB and policy rate cuts. But reaction from BoT still unlikely 
          * The BoT remains concerned about private sector leverage, and inflation is expected to return to positive territory in Q3 2015

Room for cuts has narrowed 
          The BoT is unlikely to deliver another policy rate cut in the next Monetary Policy Committee (MPC) meeting on 29 April as it assesses the impact of the March rate cut, as well as additional fiscal stimulus measures. 
          Pressure on the BoT to cut rates has increased as domestic demand has barely improved and exports have weakened further. Cabinet ministers have recently said that further rate cuts could help to weaken the baht, which give at least some support to exporters. But the problem with exports is both structural and cyclical in nature, and a weaker currency can only do so much. In any case, the Thai baht's outperformance might come to an end given income outflows in Q2 and Q3. 
          The previous rate-cut decision was non-unanimous, highlighting the fact that many MPC members still believe that further cuts will not help to lift growth significantly. The BoT is well aware that continuation with economic structural reforms is needed in order to prop up growth sustainably, and that monetary easing has its limits. Also, concerns about private sector leverage remain. Thus, we expect the BoT to revert to a wait-and-see stance, and stay reluctant to ease further as it aims to avoid the build-up of economic imbalances, e.g. excessive risk-taking encouraged by low borrowing costs. Last but not least, headline inflation is expected to revert to positive territory by Q3 2015, easing the pressure on the BoT to deal with deflation risks. 
          Full URL https://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=vUG6njgzql&n=457815.PDF