Thai Central Bank Keeps Interest Rate at 1.25% to Stimulate Economic Recovery

The Monetary Policy Committee (MPC) meeting on Wednesday opted to keep the policy interest rate unchanged, BoT assistant governor Paiboon Kittisrikangwan said in a statement.

"The global economy continues to improve. However, risks to economic recovery in the period ahead remain, especially for the major industrialised economies," the BoT statement said.

"The Asian economies are likely to recover sooner, giving rise to policy differentials which may lead to more volatile capital flows going forward. Asian currencies therefore are volatile," it said.

"The MPC will not allow the interest rate to remain low for too long to avert a liquidity problem, leading to the bubble economy," Mr Paiboon said.

"The latest economic data pointed toward a continued recovery of the Thai economy. Main supporting factors include improvements in private consumption, income from tourism, exports and agricultural sectors. Nevertheless private investment remains subdued," said the statement.

The BoT however must keep monitoring rising inflation due to the effects of oil prices and the end of the government’s subsidy measures and
economic recovery. The inflation rate is projected to stay between 0.5-3 percent as targeted, Mr Paiboon said.

He affirmed that the current baht rate is not an obstacle to economic recovery, so the BoT does not have to launch any special measures.