Thailand’s central bank held its benchmark interest rate after two consecutive cuts and said the economic recovery will be gradual, with exports likely to contract this year.
The Bank of Thailand held its one-day bond repurchase rate at 1.5 percent, with monetary policy committee members voting unanimously, it said in Bangkok on Wednesday. Twenty economists surveyed by Bloomberg predicted the decision, while one forecast a quarter of a percentage point cut.
Finance Minister Sommai Phasee said last week there is no need for further rate cuts as they will hurt savers, while Deputy Governor Paiboon Kittisrikangwan earlier said additional easing would do little to boost expansion. The government has pledged to accelerate spending to boost consumption and counter falling exports in Southeast Asia’s second-largest economy.
“The BoT appears to be taking a wait-and-see approach for now,” Krystal Tan, a Singapore-based analyst at Capital Economics Ltd., wrote in a note. “Further data showing that the economy is struggling to gain any momentum would bring rate cuts back on the agenda.”
The baht gained 0.3 percent to 33.63 against the U.S. dollar as of 2:46 p.m. local time. It is the biggest loser in the past three months among major Asian currencies. The benchmark stock index climbed 0.9 percent.
It was the monetary policy committee’s first unanimous decision since September. Earlier rate cuts have helped economic conditions, and the central bank is ready to use remaining policy space if needed, it said today in a statement.
“The economy is projected to improve gradually, but subject to downside risks from slower-than-expected recovery of the global economy, especially China and other Asian economies,” it said. The risk of deflation remains low, and the policy stance should continue to be accommodative, it said.
Thai exports fell for a fourth month in April, and consumer prices declined for a fifth month in May, the longest period of deflation since 2009, when the benchmark rate was 1.25 percent.
The central bank earlier said it may cut its economic growth forecast for this year from 3.8 percent.