BoT likely to retain policy interest rate unchanged

BANGKOK, April 17 (TNA) – The Bank of Thailand (BoT) Monetary Policy Committee is expected to keep the policy interest rate unchanged at 1.25 per cent at its meeting on April 21 since it does not want to put more pressure on the country’s economic growth now, according to a leading think tank.

Kasikiorn Research Center reported that the MPC will meet for its third round this year to discuss the country’s monetary policy direction, particularly that of the 1-day bilat repo rate which is considered Thailand’s policy interest rate.

The government earlier adopted easing monetary and fiscal policies on a continual basis since the economy recovered clearly. It saw no need to keep the interest rate low as inflationary pressure had mounted since early this year.

However, the think tank believed the ongoing political standoff remained complicated and hard to be addressed quickly. It had posed a grave threat to the country’s economic growth.

Simultaneously, the risk of inflation has not put enough pressure for MPC to rush to decide on the interest rate adjustment, so it is projected that the committee will maintain the policy interest rate at its upcoming meeting. Its decision to raise the interest rate to the normalised level will be made in due course.

In addition, KRC estimated the escalating political conflicts would make the country’s economic growth this year drop by around 0.2-1.5 per cent because the current standoff had undermined private-sector confidence, and dampened local spending in the tourism and service sectors.

In the worst-case scenario, the Thai economy might grow only 3.5 per cent this year if the political standoff were prolonged or the government were unable to implement its policy smoothly, but if Thailand’s political conflicts were to be solved quickly, the economy might expand up to 6 per cent this year, said KRC. (TNA)