Bank of Thailand holds key rate at 1.75%, as expected

Bank of Thailand holds key rate at 1.75%, as expected

The Monetary Policy Committee of the Bank of Thailand kept the policy rate at 1.75% at its meeting on Wednesday. (Bangkok Post photo)
The Monetary Policy Committee of the Bank of Thailand kept the policy rate at 1.75% at its meeting on Wednesday. (Bangkok Post photo)

The Bank of Thailand on Wednesday held its benchmark interest rate unchanged for a third straight meeting, as widely expected, saying monetary policy remained accommodative while risks to financial stability remained.

The Bank of Thailand (BoT), which in December hiked the benchmark for the first time since 2011, voted unanimously to keep the one-day repurchase rate at 1.75% - half a point above the record low.

All 19 economists polled by Reuters predicted Wednesday's hold, and most see no change for the rest of the year.

The bank's monetary policy committee (MPC) said the Thai economy "would expand at a slower pace" this year than its latest forecast of 3.8%.

"Overall financial conditions remained accommodative and conductive to economic growth... there were risks to financial stability in the future that warranted continued monitoring," it said.

Kobsidthi Silpachai, head of capital markets research at Kasikornbank, said his reading of Wednesday's statement is that policymakers "are still anxious" about the accumulation of household debt spurred by persistent low interest rates.

With an increasing number of other central banks "changing their feathers to doves rather than hawks, along with subdued inflation and sub 4% economic growth, such conditions will see the MPC keeping rates at 1.75% for the remainder of 2019," he said.

Earlier on Wednesday, New Zealand's central bank became the latest in Asia-Pacific to cut rates. India cut last month, Malaysia did on Tuesday and the Philippines is expected to do so on Thursday.


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