Thai central bank holds fire on interest rates

[webfact]

Thai central bank holds fire on interest rates

BANGKOK, October 16, 2013 (AFP) - Thailand's central bank on Wednesday left its benchmark interest rate unchanged at 2.5 percent, where it has been since May, after the economy slipped into a technical recession.

The Bank of Thailand's Monetary Policy Committee (MPC) deemed the current accommodative policy "necessary and appropriate" given the subdued state of the economy, a statement said.

"The Thai economy continued to soften in the second quarter," it said.

"Private consumption, particularly automobiles and durable goods, slowed down due to waning stimulus from first car tax rebate measures as well as (a) higher household debt burden."

But it added that "underlying economic fundamentals and accommodative financial conditions should lend some support to growth momentum".

Thailand has suffered two consecutive quarterly economic contractions this year, shrinking by 0.3 percent in the three months to June compared with the previous quarter, and by 1.7 percent in the three months to March.

Official borrowing costs are expected to remain at current levels for the rest of this year, but the next move is likely to be an increase to tackle a surge in household debt, analysts at the Capital Economics consultancy firm predicted.

"We believe the central bank is likely to start hiking rates gradually from the middle of next year. However, with the economy likely to remain fairly weak, and inflation very low, the pace of tightening is likely to be slow," they wrote in a note to clients.


-- (c) Copyright AFP 2013-10-16

[Pib]

The Thai economy is pretty much just idling now...hope they figure out how to get it back into gear.

[ableguy]

The Thai economy is pretty much just idling now...hope they figure out how to get it back into gear.

Let it idle more bang for the buck ( more baht for the dollar )

[GeorgeO]

The Thai economy is pretty much just idling now...hope they figure out how to get it back into gear.

Getting rid of the current government ... and their misguided rice scheme ... would no doubt be a good start....!

[flyingdoc]

Let's hope that the baht stabilizes now against other major currencies. The recent yo-yo movements, do nobody any good!

[brit1984]

The Thai economy is pretty much just idling now...hope they figure out how to get it back into gear.

Getting rid of the current government ... and their misguided rice scheme ... would no doubt be a good start....!

I think that depends on the method by which the "getting rid of the current government" occurs - if by democratic elections, I agree that be good but I don't see that happening any time soon.

On the contrary, I think the current government's hold on power is strong and they could be be re-elected even if they abandoned some/all of the whacky (and ineffiicent) economic policies.

Surely they know it doesn't make sense from a purely macroeconomic perspective - they have eyes, ears and (I assume) at least a few brain cells.

[yoshiwara]

Let's hope that the baht stabilizes now against other major currencies. The recent yo-yo movements, do nobody any good!

Not so much of a yo-yo, more a shift down from up.