MPC notes recovery, leaves rate at 1.50%

The MPC left the policy interest rate unchanged at 1.50 per cent yesterday, as the economy is recovering somewhat from improved domestic spending on non-durable goods and private investment, but there |are “more negative factors from abroad”, particularly the slowdowns in China’s and other Asian economies. The committee said the real interest rate was currently minus-0.4 per cent.

The Bank of Thailand currently predicts that gross domestic product will expand by 2.7 per cent this year, but expects to revise its economic forecasts at the next meeting of the MPC on December 16.

“The Thai economy in the third quarter of 2015 gradually recovered to a pace close to our previous assessment,” said Jaturong Jantarangs, the newly appointed secretary of the MPC.

This was the first meeting of the MPC under the new BOT governor, Veerathai Santiprabhob, who was appointed to the position at the beginning of October.

The BOT believes the government’s stimulus measures are starting to help the economy but it wants to see a more complete picture, including the Public-Private Partnership Committee’s fast-tracking of six projects, before making any new assessment of the stimulus’ impact on the economy next year. 

Meanwhile, Jaturong said the MPC believed that the market consensus was pointing towards a US interest-rate increase this year, and the uncertainty surrounding this was one of the factors creating volatility in the global money market.

“Only a few [economies] have lowered their interest rates recently, including China, India and Taiwan,” he noted.

“The exchange rate remains supportive of the economic recovery,” he said. 

The baht has been in the region of 35 per US dollar since hitting Bt35.886 on October 7.