Thursday, October 20, 2011

Bank of Thailand Keeps Rate at 3.50%

Central Bank News - Thailand Monetary PolicyThe Bank of Thailand held its benchmark 1-day bond repurchase rate unchanged at 3.50%.  Bank of Thailand Assistant Governor, Mr. Paiboon Kittisrikangwan, said: "The MPC deemed that the current level of the policy rate is appropriate in addressing upcoming inflationary pressure  and supporting economic adjustments amidst heightened uncertainty in the global economy. Meanwhile, with the floods not yet over, their impact on the economy was not fully evident. The MPC therefore voted 6 to 1 to hold the policy interest rate at the current level of 3.50 per cent, with one vote in favour of a 0.25 per cent decrease. The MPC would remain vigilant in monitoring developments of risks and stand ready to take appropriate policy actions."

The Bank of Thailand raised the rate to 3.50% at its previous meeting, and increased the interest rate in July this year by 25 basis points to 3.25%, continuing a string of monetary policy tightening measures, with the repo rate now 150 basis points higher than the start of the year.  Thailand reported core inflation of 2.92% in September, compared to 2.6% in June, 2.48% in May, and 2.07% in April, according to the Commerce Ministry.  Headline inflation was 4.29% in August, 4.08% in July, 4.1% in June, compared to 4.19% in May, and 4.04% in April.  The Bank of Thailand has an inflation target range of 0.5% to 3.0%.  

The Thai economy contracted -0.2% in the second quarter, after growing 2% in the March quarter, placing annual GDP growth at 2.6% (3.2% in the previous quarter).  The Thai baht (THB) has weakened about 2% against the US dollar this year, the USDTHB exchange rate last traded around 31


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