The meeting of the Bank of Thailand’s monetary policy committee on Wednesday decided to keep the repurchase rate unchanged at 3.00 per cent, the panel’s secretary-general Phaibul Kittisrikangwan said after the meeting.
It is the third straight month the central bank has kept its key interest rate unchanged.
Phaibul, an assistant governor at the Bank of Thailand (BOI), said the decision was based on the assessment that the impact of the fragile global economy, particularly the financial crisis in Europe, on Thailand would be more severe than earlier projected.
As a result, Thailand’s economic expansion could be derailed by global negative factors, rather than the pressure of rising inflation, he added.
He said his panel would revise its monetary policy as approriate to suit the changing global economic situation.
Phaibul said the panel agreed that the flexible monetary policy should be continued to support sustainable economic recovery and to deal with the possible risk of continued global economic recession.
“Therefore, all the panel’s members today voted to keep the one day repurchase rate unchanged,” he said.
He said the global economy was at risk because there was no solution forthcoming on the future of Greece and the problems of financial institutions in Spain during the last meeting of the European Union.
This would slow down economic recovery in member countries of the European Union and the United States. The debt crisis in Europe and the slowing economy in China could also hurt economic growth in countries in the Asean region, he added.
However, he believed that the continued expansion in domestic demand of Asean countries would ease the negative impact of global economies to a certain level.
For Thailand, the assistant BOI chief said the economy in the first quarter of the year grew more than the previous expectation. There were also signals that the economy would continue to further expand on the back of the government’s post-flood stimulus measures.
The inflation pressure had also been eased by the declining global oil prices, which had lowered the production costs of Thai manufacturers.