Thailand Holds Rate With Inflation Seen Meeting Goal in 2018By
All 25 economists predicted the decision to keep rate at 1.5%
Inflation will probably be below 1%-4% target for a third year
Thailand’s central bank kept its benchmark interest rate unchanged near a record low and said it could meet its inflation target next year.
After years of sluggish growth, Thailand’s economy is showing signs of recovery on the back of an export boom and rising tourism. The finance ministry last month raised its economic growth forecast for 2017 to 3.8 percent, which would be the fastest pace in five years.
Consumer spending may also strengthen in the months ahead after a yearlong mourning period for King Bhumibol Adulyadej ended in October. The government on Tuesday approved tax breaks for year-end shopping and has embarked on a 1.5 trillion baht ($45 billion) plan to build infrastructure and advanced industry along the eastern seaboard.
Consumer prices rose 0.86 percent in October from a year earlier. Inflation is expected to be below the central bank’s target band of 1 percent to 4 percent for a third straight year in 2017.
The country’s military government has said elections are likely from November next year, injecting uncertainty into the outlook. While some analysts expect a growth boost, others are concerned political division could once again flare up, damaging sentiment.
- “The BoT will be content to keep rates at their current low level over the next year or so,” Krystal Tan, Asia economist with Capital Economics Ltd., said in a note. “With the economy on a firmer footing, further rate cuts are not necessary. The BoT will be in no hurry to raise rates either. Despite the rebound in the economy, price pressures remain very low.”
— With assistance by Natnicha Chuwiruch