The Bank of Thailand's Monetary Policy Committee (MPC) left its policy interest rate unchanged, as widely expected, at this year's final meeting yesterday but again lowered its economic growth forecasts for this year and next due to conceivable downside risks.
The rate-setting panel made a split vote of 5-2 to maintain its 2% benchmark interest rate, with the minority preferring a rate cut by 25 basis points to lend support to the weaker-than-expected economic recovery amid subdued inflationary pressure.
The two members also called for a rate cut on grounds of higher downside risks to global economic growth.
Mathee Supapongse, secretary of the MPC and assistant governor of the monetary policy group, said the majority of members judged that the current policy stance remained sufficiently accommodative, given the steady path of economic recovery next year, consistent with the MPC's long-term financial stability objective.
"Going forward, members agreed the monetary policy should remain accommodative in order to reinforce the momentum of economic recovery," he said.
"Another important factor would be for the government to ensure the disbursement of public spending goes as planned."
Since cutting the benchmark rate by 25 basis points in March, the MPC has kept its policy interest rate unchanged at 2% for five-straight meetings in a bid to provide a financial environment conducive to economic recovery.
The economy contracted by 0.1% on an annual basis in the first half due mainly to the protracted domestic political turmoil and tepid export growth, while the third quarter recorded a lukewarm rebound of 0.6% year-on-year.
Mr Mathee said the rate-setting committee would revise down its economic growth forecast for this year and next due to foreseeable headwinds to growth momentum such as slower-than-expected budget disbursement, falling prices of agricultural produce, delays in public spending on infrastructure development projects and tepid private investment.
"In 2015, the economy should continue to recover, albeit at a rate lower than formerly assessed, as lower-than-expected government spending will weigh on private investment while most businesses await the implementation of public investment plans," he said.
The Bank of Thailand in September slashed its forecast for economic growth to 4.8% next year from 5.5% previously and maintained its 1.5% growth projection for this year.
Revised GDP forecasts are set to be announced on Dec 26.