BOT cuts key interest rate by 0.25%

BANGKOK, January 26 (TNA) - The Bank of Thailand (BOT)'s Monetary Policy Committee (MPC) resolved on Wednesday to further cut the central bank's key interest rate by 0.25 per cent to stimulate the national economy, as the country's post-flood rehabilitation plans are now 1-2 months behind schedule. BOT assistant governor for monetary policies Paibul Kittisrikangwan acknowledged that the seven-member committee resolved unanimously to cut the official repurchase rate from 3.25 per cent to 3.00 per cent with immediate effect, reasoning that impacts on the national economy from last year’s flooding crisis were heavier than expected and flood-related rehabilitation was 1-2 months behind schedule. Paibul said that the MPC, however, assessed that Thailand's production should be fully restored in the third quarter of this year and the latest key rate cut should speed up the country's economic stimulation. The MPC also predicted that the European economy would go into a recession and have impacts on solutions to its public debts; while the US economy would grow slower down than its potential and most Asian economies would slightly slow down in line with their export prospects, all of which would be risk factors for the Thai economy. The MPC also estimated that Thailand's inflation would go down, as domestic demand would likely recover slower than expected, noting, however, that inflation would rise during the country's post-flood rehabilitation as a result of government policies to stimulate spending and investment in the public sector. But the MPC projected that Thailand's inflation should remain within its expectation. Paibul said the MPC will update its estimation on Thailand's gross domestic product (GDP) growth in 2012 and 2013 over the next couple of weeks, with the revised figures expected to drop due to flood impacts and the global economic slowdown, whereas a re-emerging conflict between the United States and Iran should have short-lived impacts on world oil prices, as the global economic slowdown should cut international oil demand and limit oil price hikes. (TNA)