Thailand Central Bank Keeps Rates On Hold

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Thailand’s central bank left its key rate unchanged at a record low on Wednesday as the previous monetary policy easing continued to support the economic recovery.

The Monetary Policy Committee of Bank of Thailand unanimously voted to retain the interest rate at 0.50 percent. The bank had reduced the rate by 25 basis points in May.

The MPC reiterated that it stands ready to use additional appropriate monetary policy tools if necessary.

“The Committee viewed that the extra accommodative monetary policy since the beginning of the year as well as the fiscal, financial, and credit measures additionally announced helped alleviate adverse impacts, and would support the economic recovery after the pandemic subsided, facilitate the return of inflation to the target, and reduce financial stability risks,” the bank said in a statement.

Policymakers said the economy would contract slightly less than previously estimated this year but the pace of recovery next year would be slower.

According to MPC, average headline inflation would be less negative in 2020 than the previous assessment on the back of increasing energy prices as demand rose after the relaxation of Covid-19 containment measures.

Having left interest rates unchanged at 0.5 percent despite the bleak outlook, further cuts seem unlikely, Gareth Leather, an economist at Capital Economics, said. One option that has been mentioned before by the BoT is a programme of quantitative easing, but impact is likely to be small.

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