Wednesday, September 17, 2014

Thailand holds rate, accommodative stance still needed

    Thailand's central bank maintained its policy rate at 2.0 percent, as expected, saying the "current degree of monetary accommodation is still needed given an early stage of recovery, and does not pose risks to financial stability."
    The Bank of Thailand (BOT), which cut its rate by 25 basis points in March, added that its monetary policy committee had unanimously agreed on the decision though two of its members did not attend the meeting.
    The BOT said domestic demand is being shored up by improving private confidence and a rebound in private and public spending and this should help sustain economic momentum while tourism has slowly started to recover and inflation remains stable.
    Nevertheless, low agricultural prices and supply-side limitations have affected exports, it added.
    It was the third unanimous monetary policy decision by the BOT since the coup by the Thai army on May 22.  Economists had widely expected the central bank to maintain rates as the economy is starting to heal after many months of political and social unrest prior to the army's coup.
    Thailand's core inflation rate rose marginally to 1.83 percent in August from 1.81 percent in July, within the BOT's target of 0.5 to 3.0 percent core inflation. Headline inflation in August eased to 2.09 percent from 2.16 percent.


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