Thailand Leaves Monetary Policy Unchanged

At its June 18th, 2014 meeting, Thailand’s central bank left the benchmark interest rate unchanged at 2 percent, as widely expected. Policymakers also lowered its 2014 GDP growth forecast to 1.5 percent from 2.7 percent.

Statement by the Bank of Thailand:

The global economic recovery, led by major economies, retained its momentum. The US continued to grow on the back of stronger labour and housing markets. Recovery in the  euro  area  and Japan  continued  at  a moderate  pace. In China, risks in the financial sectors subsided, while the downside risks to growth diminished in the short term. Asian economies remained stable, with exports partially offsetting slowing domestic demand. 

The Thai economy contracted in the first quarter of 2014 as political uncertainties weighed on domestic demand and tourism. Moderate recovery in exports of goods could not compensate for falling domestic demand. Following a significant reduction of political uncertainties, the  economy should  benefit from improving public and private spending. A slow recovery in exports of goods and tourism however pose downside risks to growth. Meanwhile, inflationary pressure has edged higher. 

In the committee’s view, the economic recovery should pick up pace given reduced political uncertainties and a resumption of functioning public policy management. More active fiscal policy and prevailing monetary policy accommodation should lend support to a sustained economic recovery. The committee thus voted unanimously to maintain the policy rate at 2.00 percent per annum. The MPC will closely monitor economic and financial developments, and will pursue appropriate policy to ensure a sustained recovery as well as long-term financial stability.

Thailand Leaves Monetary Policy Unchanged

Bank of Thailand | Joana Taborda |
6/18/2014 9:53:14 AM