BoT cuts policy interest rate to 1.50%
The Bank of Thailand (BoT) yesterday cut its policy interest rate by 50 basis points to 1.50 percent with an aim to support economic recovery and safeguard price stability.
The central bank’s assistant governor Duangmanee Vongpradhip said the Monetary Policy Committee (MPC) found that the ongoing global financial crisis had resulted in an economic slowdown worldwide with high uncertainty surrounding the economic outlook.
She said the sharp decline in external demand adversely affected Thailand as well as other countries in this region through a marked contraction in exports.
The MPC, she said, also sees that the country’s domestic demand is still weak while the government’s measures to stimulate the economy would take some time to come into full effect.
The BoT assistant governor said the MPC also believes that country’s economy is facing a high risk to grow below zero this year since the gross domestic product (GDP) could contract for four consecutive quarters until the third quarter of this year before starting to recover late this year.
However, she said, the GDP in the first three quarters would not be as severe as in last year’s fourth quarter when it contracted 4.3 percent, adding that she is quite optimistic that the GDP in this year’s first quarter would not contract sharply due to the investment by the public sector.
The government’s economic stimulus measures and the cut in the policy rate should be able to help stimulate local spending while the US economy is expected to recover late this year as well, she added.
Last year, the MPC had increased the policy rate twice, each by 25 basis points, on July 16 and August 27 before slashing it once on December 3 by 100 basis points to make the main interest rate become 2.75 percent at the end of the year.
The policy rate was cut for the first time this year on January 14 by 75 basis points to 2.00 percent.
The policy rate of 1.50 percent is the same as during the periods from May 2000 to May 23, 2001, and from August 25 to October 19, 2004, while the lowest rate since 2000 was at 1.25 percent during the period from June 27, 2003, to July 20, 2004.
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