BANGKOK (BLOOMBERG) - Thailand's central bank kept its key interest rate unchanged for the fifth straight meeting, holding fire before a widely anticipated US Federal Reserve rate increase as it leans on government stimulus spending to revive local demand.
The Bank of Thailand held its one-day bond repurchase rate at 1.5 per cent, with monetary policy committee members voting unanimously in favour, it said in Bangkok on Wednesday (Dec 16). Twenty-two economists surveyed by Bloomberg News predicted the decision, while one forecast a quarter-of-a-percentage-point cut.
Thailand's military government has poured money into rural areas and small businesses to prevent the economy from worsening, and this week announced plans for a US$2.78 billion (S$3.91 billion) fund that will provide incentives to investors in key industries.
Global funds have pulled a net US$4.3 billion from Thai stocks and bonds this year as the prospect of a US rate increase sapped demand for emerging-market assets.
"The window for Thai rate cuts has already closed given the expected Fed rate hike," said Mr Tim Leelahaphan, an economist at Maybank Kim Eng Securities Thailand Pcl, referring to the Fed's decision later on Wednesday (Thursday morning, Singapore Time).
"Government spending is a more effective tool to boost growth than lower interest rates."