Thailand holds key rate as fiscal stimulus boosts growth outlook

 A Tuk Tuk, three wheeler taxi drives past under Lunar New Year banners on the eve of Chinese Lunar New Year in Bangkok's Chinatown, Thailand. PHOTO: EPA
A Tuk Tuk, three wheeler taxi drives past under Lunar New Year banners on the eve of Chinese Lunar New Year in Bangkok's Chinatown, Thailand. PHOTO: EPA

BANGKOK (BLOOMBERG) - Thailand kept its key interest rate unchanged for a sixth straight meeting as the government ramps up spending to help shield the nation from weak global demand.

The Bank of Thailand held its one-day bond repurchase rate at 1.5 per cent, with committee members voting unanimously in favour, it said in Bangkok on Wednesday (Feb 3).

Prime Minister Prayuth Chan-Ocha approved in January a plan to spend 35 billion baht (S$1.4 billion) on infrastructure in villages as the government's latest stimulus measure. The World Bank forecast last month economic growth will weaken to 2 per cent this year before rebounding in 2017 and 2018, as China's slowdown hurts the global economy.

"Additional fiscal measures and public investment should help support the economic recovery," Mr Nalin Chutchotitham, a Bangkok-based economist at HSBC Holdings Plc, said before the decision. The central bank will likely stay on hold "as long as inflation expectations and core inflation stay relatively stable".