Thailand: Bank of Thailand maintains interest rates
October 19, 2011
At its 19 October monetary policy meeting, the Bank of Thailand (BoT) left the one-day repurchase rate unchanged at 3.50%, in a move broadly expected by the market. The decision marked the first pause this year after the Bank pushed up the key policy rate nine times from a record low of 1.25%. In its statement, the BoT underscored concerns regarding the global economic outlook, which has deteriorated in the wake of ?the impasse over the resolution of the euro area's sovereign debt problem? as well as bad news from the United States, where the ?economic data indicated a fragile recovery and market perception of a recession had increased.? However, monetary authorities stated that the Thai economy will continue to benefit from intra-regional trade and strong domestic demand, buttressed by the upcoming government stimulus measures, which should help to cushion growth and limit downside risks. On a negative note, monetary officials anticipate that the recent floods, which partially halted some sectors of the economy, will dent economic growth over the remainder of the year, though reconstruction spending will provide an additional boost to domestic demand going forward. Moreover, even though inflation remains elevated, the Bank stated that ?the current level of the policy rate is appropriate in addressing upcoming inflationary pressure and supporting economic adjustments.? The next monetary policy meeting is scheduled for 30 November.
Author: Ricardo Aceves, Senior Economist