Thailand holds interest rate again as government bets on stimulus

BANGKOK (BLOOMBERG) - Thailand kept its key interest rate unchanged for a seventh straight meeting as policy makers judged that the economy will soon start to see the benefit of stimulus measures introduced by the country's military government.

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 on Wednesday.

Prime Minister Prayut Chan-o-cha's cabinet on Tuesday approved an additional 70 billion baht (S$2.72 billion) support the housing market, including loans to developers and low-income earners, adding to a series of stimulus measures in recent months aimed at boosting consumption in rural areas. Governor Veerathai Santiprabhob has said that fiscal policies will do more to boost domestic demand than lower borrowing costs.

"With fiscal policies coming in full force, it's not necessary for the central bank to cut rates further," Somprawin Manprasert, chief economist at Bangkok-based Bank of Ayudhya Pcl, said before the decision.

"Fiscal policies are more effective in this situation and borrowing costs are already low. The economy should improve in the second half, supported by government stimulus measures and infrastructure investments."