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Thailand’s central bank keeps interest rate unchanged (1.5%)

The Bank of Thailand agreed unanimously to keep the policy interest rate at 1.5 percent unchanged for the fifth straight meeting.

Boris Sullivan

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The Monetary Policy Committee agreed unanimously to keep the policy interest rate at 1.5 percent unchanged for the fifth straight meeting.

Twenty-two economists surveyed by Bloomberg News predicted the decision, while one forecast a quarter-of-a-percentage-point cut.

The BoT assessed that economic recovery for the third quarter has picked up with the prospect that the growth rate for the whole year will slightly exceeded the 2.7 percent projection.

From the third quarter to October 2015, the Thai economy gradually recovered, supported by high disbursement of public expenditure, an expansion in private consumption of necessity goods, and an improving number of tourist arrivals, especially Chinese tourists. Meanwhile, merchandise exports continued to contract, and going forward would continue to face downside risks from a slowdown in the Chinese and other Asian economies and subdued commodity prices.

Mr Chaturong Chantharung, assistant governor for monetary policy of the Bank of Thailand, said growth rate for next year would be close to an earlier projection of 3.7 percent.

Nevertheless, the economic growth forecast for 2015 was slightly revised up on the back of continued expansion of consumption and fiscal stimulus measures. The economic growth forecast for 2016 remained close to the previous assessment.

The Monetary Policy Committee, said Mr Chaturong, felt that monetary situation and exchange rate were still conducive to economic recovery while domestic money market had the tendency to fluctuate as a result of interest rate change in industrialized economies and Federal Reserve’s decision on interest rate.

He said that the central bank needs to brace itself against the risk factors affecting the economy and is ready to ease restrictions on monetary policy.
The Committee assessed that monetary conditions and exchange rate remain supportive to the economic recovery.

Looking ahead, monetary policy stance should continue to be sufficiently accommodative.

Moreover, given financial stability considerations and a potential rise in financial market volatility due to monetary policy divergence among advanced economies, the policy interest rate should be kept unchanged at this meeting.

However, the Committee will continue to closely monitor downside risks to growth, particularly those stemming from a slowing global economy, structural limitations, and uncertainty in the global financial markets.
The Committee stands ready to utilize an appropriate mix of available policy tools in order to support the economic recovery, while ensuring financial stability

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