Thailand’s central bank raises policy rate to 1.50 pct
The Bank of Thailand (BoT) yesterday decided to raise its 15-month-long key policy rate of 1.25 percent by 0.25 percent, due to the country’s economic recovery and the central bank’s confidence in continuous economic growth.
In April last year, the BoT’s Monetary Policy Committee (MPC) had cut the one-day repurchase rate from 1.50 to 1.25 percent when the global financial crisis, which hit its peak in September and October 2008, still affected Thai economy significantly through the contraction of the country’s exports.
The 1.25-percent policy rate was then put on hold during the past nine meetings of the MPC until yesterday.
After the MPC’s meeting, BoT assistant governor Paiboon Kittisrikangwan said in a statement that the committee saw the global economy continue recovering during the first half of this year and expected it to grow favourably throughout the year.
However, he said, the MPC realised that there are still key risks to global economic growth, such as the winding down of fiscal stimulus measures in many countries, and some problems related to sovereign debt and financial institutions in some European economies.
Meanwhile, the committee also saw that Asian economies have been expanding robustly, with more evident signs of inflationary pressure ahead, said the assistant governor for Monetary Policy Group.
Domestically, Paiboon said, the impact of recent political unrest on the country’s economy in the second quarter had proved to be limited while the tourism industry has shown signs of a quick recovery, consumption and production have been slightly affected and projected to expand for the rest of the year, and exports and private investment have been growing continuously.
Overall, he said, the MPC believed the country’s economic growth should be higher than previously anticipated and, although inflationary pressure remains modest at present, it is expected to rise next year in line with robust economic expansion.
He said, “The MPC judged that the economic recovery has become more evident and the economy should continue to grow, thus lessening the need for an exceptionally accommodative monetary policy.”
Therefore, he said, the MPC decided to raise the policy interest rate by 0.25 percent per annum, from 1.25 to 1.50 percent per annum, with a view to bringing policy interest rate closer to normal levels.
This year, the MPC is scheduled to meet again on August 25, October 20 and December 1.
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