Central bank keeps policy interest rate at 1.50 pct

BANGKOK, May 24 (TNA) – The Bank of Thailand (BoT)’s Monetary Policy Committee maintained the key policy interest rate at 1.50 per cent as the committee viewed that monetary policy should remain accommodative. Jaturong Jantarangs, Secretary of the Monetary Policy Committee (MPC) said the committee voted unanimously to maintain the policy rate. The committee assessed that the Thai economy’s growth outlook improved further despite facing risks especially on the external front. Further improvement in the growth outlook was attributed to the continued recovery in merchandise exports as Thailand’s trade partner economies gained momentum. Private consumption picked up supported by improved farm income and consumer confidence. Meanwhile, private investment was projected to slowly recover. However, the improved growth outlook was still subjected to risks that warranted close monitoring. These included US economic and foreign trade policies, China’s economic structure reforms and geopolitical risks. The committee viewed that financial stability remained sound with sufficient cushion against economic and financial volatilities on both domestic and external fronts. However, there remained pockets of risks that warranted close monitoring such as the deterioration in debt serviceability of small-and-medium sized enterprises (SMEs), which in part reflected competitiveness issues. Overall financial conditions remained accommodative and conductive to economic growth with ample liquidity in the financial system and low real interest rate. Headline inflation turned out softer than expected on account of lower fresh food prices due to this year’s higher agriculture output and last year’s base effects following the drought. Meanwhile, demand-pull inflationary pressure remained low. Nevertheless, headline inflation was expected to gradually rise in the latter half of the year. The central bank cannot assess an impact from the bombing at the military hospital as of now but it is not likely to affect tourism, which adjust well to negative factors like several bombings in the past. (TNA)