Policy Rate

The Bank of Thailand (BOT) uses inflation targeting to drive monetary policy. On 17 January 2007, the Monetary Policy Committee (MPC) set the 1-day repurchase rate as the new key policy rate. The 1-day repurchase rate replaces the 14-day repurchase rate, which was previously used by the MPC. The BOT also established an End-of-Day Liquidity Adjustment Window for overnight lending and borrowing to financial institutions at the policy rate +/- 50 basis points.

Repurchase reference yield

All repurchase transactions are done through the BOT using bilateral repurchase transactions with primary dealers. The repurchase market – run by the BOT -- helps manage liquidity for financial institutions, and thus rates reflect central bank risks rather than those of other transaction participants.

Prime Rates

The minimum lending rate (MLR), which is used for businesses, is slightly above the minimum overdraft rate (MOR). Most commercial banks use a slightly higher minimum retail rate (MRR) for general borrowers. The MLR, MOR, and MRR are all based on a bank’s cost of funds, sourced either from deposits or from interbank borrowing.

Short-term Interest Rate

The Bangkok Interbank Offered Rate (BIBOR) is the reference rate for short-term interest rates in the Bangkok interbank market. BIBOR is calculated from the average of rates commercial banks use to lend to other banks.