Thailand keeps policy rate at 2½% as economic expansion softens

By Tali David

Minneapolis, Aug. 21 - The Monetary Policy Council of the Bank of Thailand voted six to one at a meeting on Wednesday to maintain the policy rate at 2½%, according to a bank press release.

In the release, committee secretary Paiboon Kittisrikangwan said that the global economy exhibited signs of gradual improvement. The U.S. economy expanded on the back of manufacturing and housing sectors, while healthier balance sheets of the private sector should help support ongoing recovery. The Chinese economy moderated in the second quarter, though recent indicators pointed to some improvement.

The euro area economies continued to stabilize, but recovery is weighed by financial health of both household and corporate sectors, the bank said. In Asia, domestic demand slowed, and notwithstanding tentative signs of recovery in exports for some countries, exports generally remained weak.

Growth of the Thai economy continued to soften in the second quarter, broadly in line with the committee's previous assessment. Private consumption, particularly automobiles and durable goods, slowed down due to waning stimulus from first‐car tax rebate measures as well as higher household debt burden. Exports weakened in line with subdued economic growth in the region, Kittisrikangwan said.

One member voted to lower the policy interest rate by 25 basis points to support the continuity of growth next year.

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