Thailand's central bank kept the policy rate unchanged at 2 percent on January 28th, as current policy stance is considered to be sufficiently supportive of the economic recovery, helping to contain risks associated with a prolonged period of low interest.
The decision was voted by five out of seven members of the committee. The dissenting voices expected the interest rate to fall, due to low inflation.
Statement by the Bank of Thailand:
In the fourth quarter of 2014, the Thai economy continued to expand from improving exports and tourism, which helped to offset slightly weaker-than-expected domestic demand. Looking ahead, the economy should continue to recover and benefit from a decline in energy prices which should strengthen the recovery of domestic demand. Nevertheless, key downside risks from global economy remain, including slow recovery in major trading partner economies, lingering political uncertainty, and policy divergence among major central banks which could result in higher volatility in the global financial markets.
Headline inflation decline ddue to a marked fall in energy prices. This increased the probability of breaching the lower bound of the inflation target in 2015, but is not considered deflation because domestic demand continues to expand and non-oil prices do not decline. Core inflation thus remained stable. In addition, headline inflation is expected to rebound in the second half of 2015, in tandem with global oil prices following more balanced conditions in the global oil market. Risks to overall financial stability remain contained, but household loan quality and asset price movements warrant continued monitoring.
Going forward, members concurred that monetary policy should stay accommodative to provide continued support for the economy. The MPC will closely monitor developments of the Thai economy and stand ready to take appropriate actions as warranted.
1/28/2015 10:21:27 AM