BOT maintains policy rate on lower growth projection
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The Bank of Thailand's Monetary Policy Committee members voted 5 to 2 to maintain the policy rate at 3 per cent.
At the meeting today, the committee also revised downward the 2012 economic growth projection from 6 per cent to 5.7 per cent. It anticipates the export revneue to expand by only 7 per cent this year, against 8 per cent in the previous forecast.
The MPC's decision on the policy rate has been widely expected. The central bank has so far described the euro zone debt crisis as the biggest threat to the Thai economic recovery.
Paiboon Kittisrikangwan, secretary of the Monetary Policy Committee (MPC), announced after the meeting that risks to the global economy increased further as weaknesses in consumer spending and the labour market dampened US economic growth, while a comprehensive resolution to the eurozone crisis remained elusive.
"A slowing global economy weighed on Asian and Chinese exports, which continued to soften. Waning global demand was reflected in moderating global price pressure. In this context, some central banks have eased policy with a view to contain downside risks to growth," he said.
The committee was of the view that domestic demand would enjoy further boost by accommodative monetary conditions, strong credit growth, good employment opportunities, and government stimulus measures. These factors should continue to sustain private consumption and investment expenditures going forward. Nonetheless, the worsening global economic outlook began to impact on the export sector resulting in a downward revision to the economic growth outlook. Meanwhile, inflationary pressure moderated and projected inflation was within the target range.
"With economic growth close to potential and inflation remaining within target, the MPC deemed that the overall macroeconomic policy mix was appropriate. The MPC voted 5 to 2 to maintain the policy rate at 3.00 percent per annum, with two votes in favour of a 0.25 percent decrease. The majority of members viewed the current monetary policy stance to be accommodative enough to support domestic economic growth going forward and cushion, to some degree, against global economic risks. The MPC would closely monitor developments in the global economy as well as domestic demand conditions and stood ready to take appropriate action as warranted," he said.
