The Bank of Thailand (BoT) maintained the policy interest rate at 1.25 per cent annually to favour economic recovery. The Monetary Policy Committee (MPC) meeting on Wednesday opted to keep the policy interest rate unchanged, BoT assistant governor Paiboon Kittisrikangwan said in a statement.
“The global economy continues to improve. However, risks to economic recovery in the period ahead remain, especially for the major industrialised economies,” the BoT statement said.
“The Asian economies are likely to recover sooner, giving rise to policy differentials which may lead to more volatile capital flows going forward. Asian currencies therefore are volatile,” it said.
“The MPC will not allow the interest rate to remain low for too long to avert a liquidity problem, leading to the bubble economy,” Mr Paiboon said.
“The latest economic data pointed toward a continued recovery of the Thai economy. Main supporting factors include improvements in private consumption, income from tourism, exports and agricultural sectors. Nevertheless private investment remains subdued,” said the statement.
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External stability in Thailand was upheld by high international reserves, while trade and current account were close to balance. Regarding internal stability, inflation rose from last year in line with higher oil prices, despite a downward trend during the second half of the year. Unemployment rate remained low in Thailand in 2008 but employment started to deteriorate in the forth quarter, particularly in the production sector affected by economic slowdown.