Thai Monetary Policy Unchanged in October

The Monetary Policy Committee of the Bank of Thailand decided on October 16th to leave the policy rate unchanged at 2.5 percent, citing uncertain global economic recovery and the delay in fiscal disbursement for infrastructure projects as key downside risks to the economy.

Statement by the Bank of Thailand:

The global economy improved gradually, though with substantial downside risks. The US economy expanded at a moderate pace on the back of private consumption. While the impact of the US government shutdown should be limited, failure to lift debt ceiling poses a substantial risk to global financial and economic stability. A number of euro area economies exhibited nascent signs of recovery, as sentiments picked up. The Chinese economy showed a broad-based recovery in exports, manufacturing, and investment, while North Asian economies improved on exports. ASEAN economies moderated from domestic demand, with somewhat higher external vulnerabilities in some countries. The region remained exposed to global market volatility amid uncertainties about the timing of QE tapering and the US fiscal impasse.   

The  Thai  economy  grew  more slowly  than  previously  assessed,  but  began  to stabilize and showed signs of improvement in some sectors. Exports began to recover in line with better global demand, while private consumption and investment have stabilized. The  outlook  points  towards  a  gradual  growth  recovery,  supported  by  accommodative financial conditions. Key downside risks stem from uncertain global economic recovery as well as a delay in fiscal disbursement especially for infrastructure projects. Inflation edged lower in line with subdued production  costs and domestic demand. Household debt has decelerated somewhat. 

The MPC judges that the Thai economy is stabilizing and should gradually recover. Fiscal  policy,  despite  delayed  disbursement,  is still  lending support  to  growth.  Current accommodative monetary policy remains appropriate in supporting economic recovery in the periods ahead, given uncertain global economic and financial conditions. The MPC thus voted unanimously to maintain the policy rate at 2.50 percent per annum.

Thai Monetary Policy Unchanged in October

Bank of Thailand | Joana Taborda |
10/16/2013 9:52:20 AM