The fiscal policy committee of the Thai central bank agreed to maintain the key policy rate at 1.5 percent, citing clear sign of economic recovery and low inflation pressure which is likely to pick up in the second half of the year.

Fiscal policy committee secretary Chaturon Chantharangs said that the Thai economy was showing clearer sign of recovering, resulting from export growth, increased consumption of the private sector, especially the farming sector and growth in tourism.

U.S. President Donald Trump’s policies pose high risks to growth, both on the upside and the downside, and the central bank will conduct analyses of how those scenarios may play out, Assistant Governor Jaturong Jantarangs said, as reported by Bloomberg

Headline inflation softened and might fall below the target in some periods mainly due to supply side factors. Nevertheless, it was projected to rise during the latter half of the year. Meanwhile, overall financing conditions remained accommodative and conducive to economic growth. Hence, the Committee decided to keep the policy rate unchanged at this meeting.

However, he said government spending still remains the key engine to drive the economy while private investment is gradually picking up.

He warned that there are risk factors which may affect Thailand’s economic growth, especially from economic and trade policies of the US and China’s economic reforms.

Looking ahead, the Thai economy’s growth outlook improved further despite uncertainties on the external front. Meanwhile, demand-pull inflationary pressures remained low. Thus, the Committee viewed that monetary policy should remain accommodative, and would stand ready to utilize available policy tools to sustain economic growth while also ensuring financial stability.

Inflation pressure has eased than anticipated, resulting from price decrease of fresh produce in line with increase in the prices of vegetables and fruits. However, it is anticipated that inflation will crease in the second half of the year.

Source: Bank of Thailand Press Release

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