Thailand keeps policy rate at 3% as economic recovery continues

By Tali David

Minneapolis, July 25 - The Monetary Policy Council of the Bank of Thailand voted five to two at a meeting on Wednesday to maintain the policy rate at 3%, with two votes in favor of a 25-basis-point decrease, according to a bank press release.

The rate was cut from 3¼% in January.

In the release, assistant governor Paiboon Kittisrikangwan said that risks to the global economy increased further as weaknesses in consumer spending and the labor market dampened U.S. economic growth, while a comprehensive resolution to the eurozone crisis remained elusive. A slowing global economy weighed on Asian and Chinese exports, which continued to soften.

The Thai economy continued to recover steadily from the floods and was close to potential, the release said. Domestic demand growth had been supported by accommodative monetary conditions, strong credit growth, good employment opportunities and government stimulus measures. These factors should continue to sustain private consumption and investment expenditures going forward.

The council said the majority of members viewed the current monetary policy stance to be accommodative enough to support domestic economic growth going forward and cushion, to some degree, against global economic risks, and it would closely monitor developments in the global economy as well as domestic demand conditions and stood ready to take appropriate action as warranted.

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