Thailand keeps policy rate steady at 3½% on global economic concerns

By Susanna Moon

Chicago, Oct. 19 - The Monetary Policy Council of the Bank of Thailand decided to maintain the 3½% policy interest rate at its meeting on Wednesday.

Six council members voted to leave the rate unchanged while one member sought to cut the rate by 25 basis points.

In the end, the bank deemed the current policy rate sufficient to address upcoming inflationary pressure and support economic adjustments amid heightened uncertainty in the global economy, according to a bank press release.

The bank cited the gloomy global economic outlook resulting from the lack of progress in the euro area's sovereign debt problem, which sparked a surge in financial market volatility.

Inflationary pressure was sustained by growth in domestic demand, though declines in input costs, such as moderated oil prices from a weaker global economy, as well as more stable inflation expectations will lessen inflationary pressure going forward, the release said.

The bank raised the policy interest rate by 25 bps to 3½% on Aug. 24, after back-to-back hikes of 25 bps to 3¼% on July 13 and to 3% on June 1. The council also voted by six to one to raise the rate by 25 bps to 2¾% at its meeting on April 20.

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