Thailand Keeps Key Rate at 1.5% as Government Ramps Up Spending

Thailand kept its benchmark interest rate unchanged for an eighth consecutive meeting as it bet that rising government spending will spur an economic recovery.

The Bank of Thailand held its one-day bond repurchase rate at 1.5 percent, matching the forecasts of all 21 economists surveyed by Bloomberg News.

The military government led by Prime Minister Prayuth Chan-Ocha has issued a series of economic stimulus measures worth more than 400 billion baht ($11 billion) since last year to help shore up local demand. Transport Minister Arkhom Termpittayapaisith said last month the government plans to use a special-powers rule to speed up the approval of big infrastructure investments.

“We don’t see any reason for the central bank to cut the rate now as government spending is on track and they are pushing hard for investments,” Usara Wilaipich, a Bangkok-based economist at Standard Chartered Plc, said before the decision. “Inflation is also picking up. The central bank may want to preserve the limited policy room available to cope with unexpected shocks, when needed.”

The economy has showed signs of improvement with customs exports returning to positive in February and March after 13 consecutive months of contraction. Consumer prices rose in April for the first time in 16 months.

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