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MPC
Policy rate maintained at 2.50%
The Nation

BANGKOK: -- The Bank of Thailand's Monetary Policy Committee voted 6 to 1 to maintain the policy rate at 2.50 per cent per annum.

One member voted to lower the policy interest rate by 25 basis points, to support the continuity of growth next year.

Paiboon Kittisrikangwan, secretary of the Monetary Policy Committee (MPC), said after the MPC’s meeting today that "The MPC deems the current accommodative monetary policy to be necessary and appropriate for the ongoing adjustments of the Thai economy. Inflation remains subdued, while risks to financial stability and uncertainties regarding global financial conditions warrant continued monitoring."

The global economy exhibited signs of gradual improvement, the MPC viewed. The US economy expanded on the back of manufacturing and housing sectors, while healthier balance sheets of the private sector should help support ongoing recovery. The Chinese economy moderated in the second quarter, though recent indicators pointed to some improvement.

The euro area economies continued to stabilise, but recovery is weighed by financial health of both household and corporate sectors. In Asia, domestic demand slowed, and notwithstanding tentative signs ofrecovery in exportsforsome countries, exports generally remained weak.

The MPC also said the softening of the Thai economy in the second quarter was broadly in line with the committee’s previous assessment. Private consumption, particularly automobiles and durable goods, slowed down due to waning stimulus from first‐car tax rebate measures as well as higher household debt burden. Exports weakened in line with subdued economic growth in the region. In the periods ahead, domestic demand and exports are expected to gradually recover, with some risks of delay. Supply’side constraints may also play some part in holding back growth of private investment and exports. Nonetheless, underlying economic fundamentals and accommodative financial conditionsshould lend some support to growth momentum. Private credits decelerated somewhat, but continued to expand at a high pace, especially for consumer loans. Both core and headline inflation edged lower in line with softening economy.


-- The Nation 2013-08-21

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Thailand holds interest rate amid economic weakness

BANGKOK, August 21, 2013 (AFP) - Thailand on Wednesday left its benchmark interest rate at 2.5 percent amid concerns over sluggish economic growth.

The move, which follows a trim to interest rates in May, comes after official figures showed persistent weakness in the kingdom's economy in the first two quarters of the year.

"Continuing with monetary policy easing will support economic growth," said Paiboon Kittisrikangwan, secretary of the Thai central bank's Monetary Policy Committee (MPC).

Thailand has suffered two consecutive quarterly economic contractions this year, with figures Monday showing the economy shrank 0.3 percent in the three months to June compared to the previous quarter. This followed the revised 1.7 percent contraction in the three months to March.

Manufacturing output eased 1.0 percent on a year-on-year basis, with manufacturers hit by slowing domestic demand and ongoing global weakness, the National Economic and Social Development Board said in a statement, as the US and China struggle to get up to speed.

The central bank forecast gradual recoveries in the US, China and the EU, adding that there was little risk of inflation on the horizon.

Analysts at Kasikornbank said the move was expected, as policymakers seek to keep the pressure off both private sector and household borrowers.

"We expect the MPC to maintain the current rate of 2.5 percent until the end of this year," Nalin Chutchotitham, Market and Economic Research Specialist at Kasikornbank told AFP.


-- (c) Copyright AFP 2013-08-21