Policy Rate Maintained At 2.75%

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MPC
Policy rate maintained at 2.75%
The Nation

BANGKOK: -- Bank of Thailand's Monetary Policy Committee on Wednesday decided to maintain the policy rate as expected, with only one member voting for a rate cut.

The rate has been maintained at 2.75 per cent since October 2012.

After the meeting today, Paiboon Kittisrikangwan, secretary of the Monetary Policy Committee (MPC), announced that 5 members voted to keep the rate on hold, with one member voting for a cut in the policy rate by 0.25 per cent per annum. One MPC member was unable to attend this meeting due to obligations abroad.

"The MPC will continue to closely monitor domestic economic developments as well as risks to financial stability, and stand ready to take appropriate policy action," he said in the announcement.

In the MPC’s view, the global economy has continued to recover gradually. However, tail risks have edged up somewhat since the last meeting, as financial crisis in the eurozone could exacerbate the economic contraction. The US economy has improved on the back of private consumption and investment, with fiscal sequestration weighing on growth. The Japanese economy has benefited from planned monetary and fiscal policy stimulus. The Chinese and Asian economies have continued to expand as expected on the back of domestic demand, while the outlook for exports improved slightly.

The Thai economy is projected to moderate toward a normal trend in the first quarter of 2013, after accelerating in the previous quarter. In the periods ahead, domestic demand should continue to be a key engine for growth, supported by favourable household income, high employment, as well as accommodative monetary and credit conditions. Fiscal stimulus should also gradually pick up pace in the second half of this year, in line with the start of public investment in flood management and large’scale infrastructure projects, lending further impetus to private investment. Exports should expand slowly, in line with global economic conditions. Inflation remains within the target, but potential upward pressure from supply constraints and higher labour costs warrants monitoring.

The MPC judges that, given the fragile state of the global economy, a continuation of accommodative monetary policy stance remains appropriate. However, risks to financial stability, including volatile exchange rate and capital flows, are a concern.

-- The Nation 2013-04-03

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Thailand holds rates amid upbeat outlook

BANGKOK, April 3, 2013 (AFP) - Thailand's central bank left its benchmark interest rate unchanged at 2.75 percent on Wednesday, with policymakers citing the ongoing strength of the kingdom's economy.

The Bank of Thailand said domestic demand was expected to continue to be a key engine for growth, supported by buoyant household income and high employment.

"The Thai economy is projected to moderate towards a normal trend in the first quarter of 2013, after accelerating in the previous quarter," said assistant governor Paiboon Kittisrikangwan.

Gross domestic product (GDP) soared at its fastest ever pace of 18.9 percent in the three months through December 2012 from the year-earlier period, according to figures released in February.

The government's National Economic and Social Development Board (NESDB) has forecast economic growth of 4.5-5.0 percent for 2013, after an expansion of 6.4 percent in 2012.

The Bank said public spending on flood management and infrastructure projects were expected to provide a boost for investment.

"Exports are expected to expand slowly, in line with global economic conditions," Paiboon said.

The committee last cut rates in October 2012 to help manufacturers.

Thailand suffered devastating floods in late 2011 which took a heavy toll on its lucrative manufacturing base, but its economy has since recovered strongly.

The Bank of Thailand is likely to keep rates on a "prolonged hold", according to Daniel Martin, Asia Economist at Capital Economics.

He said there was however a chance that a fresh downturn in the global economy could place a drag on Thailand's export-driven economy, with the possibility that policymakers could then look to cut rates.

-- (c) Copyright AFP 2013-04-03

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