Thailand's Monetary Policy Committee (MPC) has moved to keep the policy rate at 1.5% despite concerns that increasing external downside risks could dent the momentum of the country's economic recovery.
The seven-member rate-setting council voted unanimously to maintain the current benchmark interest rate, citing the faster pace of domestic economic recovery in last year's final quarter due to the high disbursement of public expenditures, increased arrival of tourists and an expansion in private consumption.
The committee also concluded that the monetary policy space should be preserved, while being mindful of risks to financial stability.
"What affects [Thailand's economic recovery momentum] more than financial market [volatility] is economic growth among our trading partners," said Jaturong Jantarangs, an assistant governor of the monetary policy group and the MPC's secretary.
"Financial markets can manage [incurred] volatility to a certain degree, but we have assessed that the economic recovery of [Thailand's] trading partners, particularly China and Asian economies, constitutes the greater risk."
A shift in the global trade structure, low commodity prices and monetary policy divergence among advanced economies, which are influencing capital flows and movements of foreign exchange rates, are identified as other rising external risks that could affect Thailand's economy, he said.
The MPC still projects Thailand's GDP growth this year to expand at a rate close to the previous assessment, Mr Jaturong said.
The main growth drivers are public and private investment coupled with domestic consumption.
He said it should be accepted that the domestic economic recovery will not be "broad-based", as income earned in the agricultural sector has been hit by the local drought and low commodity prices have also taken a toll on farm income.
Inflationary pressure, meanwhile, declined further than anticipated due to a sharp and larger-than-expected fall in global oil prices, causing inflationary risks to skew more towards the downside, said Mr Jaturong.
He added that headline inflation is projected to rise gradually and likely slide into positive territory during the first half of this year.
Earlier, the central bank trimmed its 2016 economic growth forecast to 3.5% from 3.7% on the same projection of heightening external downside risks, with a flat growth rate projected for this year's exports.
The committee will reconvene on March 11 and the latest economic forecast will be published through the Monetary Policy Report on March 20.