Thai central bank holds policy rate, keeps growth outlook

Thailand's central bank left its key policy rate unchanged on Wednesday (Dec 21), as expected, and maintained its growth estimate for this year and 2017, but raised its outlook on exports.
Thailand's central bank left its key policy rate unchanged on Wednesday (Dec 21), as expected, and maintained its growth estimate for this year and 2017, but raised its outlook on exports.PHOTO: REUTERS

BANGKOK (REUTERS) - Thailand's central bank left its key policy rate unchanged on Wednesday (Dec 21), as expected, and maintained its growth estimate for this year and 2017, but raised its outlook on exports.

It said monetary conditions were still accommodative and conducive to the economic recovery and should remain so as South-east Asia's second-largest economy is facing greater risks.

Policymakers are counting on government spending to keep Thailand's economic engines humming as it confronts rising global trade protectionism and emerging market capital outflows in the wake of rising US interest rates. But the junta has been slow to push through promised infrastructure reform.

The Bank of Thailand's Monetary Policy Committee (MPC) voted unanimously to keep the one-day repurchase rate at 1.50 per cent, where it has been since April 2015.

"The committee assessed that the Thai economy would continue to expand at a pace close to the previous assessment, but downside risks increased. Inflation was still expected to slowly rise," it said in a statement.

The BOT maintained its economic growth projection at 3.2 per cent this year and again in 2017. Last year's growth was 2.8 per cent.

But it now expects exports to fall just 0.6 per cent this year, rather than decline 2.5 per cent seen three months ago. For 2017, it predicts exports to be flat, rather than contract 0.5 per cent.