Thailand opts to keep rate at 1½% as inflationary pressure declines

By Tali Rackner

Norfolk, Va., Sept. 16 – Bank of Thailand’s Monetary Policy Committee voted unanimously to maintain the policy rate at 1½% at its meeting on Wednesday.

The committee said that from the second quarter to July 2015, the Thai economy gradually recovered. Private sector confidence and spending have been weighed down by continued contraction in exports of goods, a result of a slowdown in the Chinese and other Asian economies, as well as sluggish household income.

Inflationary pressure declined due mainly to lower-than-expected oil prices. Consequently, headline inflation is expected to stay in negative territory for the rest of 2015, before turning positive in the first quarter of 2016, later than previously assessed. Meanwhile, deflationary risks remain contained as core inflation is positive, reflecting that prices of most non-energy items have been stable or trended upwards.

The committee said it assesses that the Thai economy continues to face negative factors, particularly a slowing global economy and higher volatility in the global financial markets. However, monetary conditions, including exchange rate development, remain supportive to the economic recovery.

As previously reported, the committee lowered the rate by 25 basis points to 1½% in April, by 25 bps to 1¾% in March and by 25 bps to 2% in February.

© 2015 Prospect News.
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