Bank of Thailand holds rates, cites better growth outlook

By Orathai Sriring and Kitiphong Thaichareon, Reuters

BANGKOK — Thailand’s central bank left its benchmark interest rate unchanged at 2.75 percent on Wednesday, as expected, saying the global economy continued to recover while growth this year could be higher than thought and inflation was stable. The central bank said its seven-member Monetary Policy Committee (MPC) unanimously agreed to hold the one-day repurchase rate for the second straight meeting after a surprise quarter-point cut in October. All 14 economists polled by Reuters had expected no change in the policy rate as Southeast Asia’s second-biggest economy is holding up despite global problems. There is no consensus among economists on the rate outlook for this year, with inflation and credit growth a concern for some but global risks remaining more important for others. The Bank of Thailand (BOT) said growth in the fourth quarter of 2012 would probably turn out higher than expected, leading it to expect higher growth rates in 2012 as a whole and in 2013.

“Private consumption and investment continued to be the key growth drivers, supported by consumer and business confidence, favorable household income, full employment as well as accommodative monetary conditions with continued high rates of credit growth,” the central bank’s statement said. “The export sector showed incipient signs of a broad based recovery while the service sector and tourism expanded robustly,” it said. Price Pressure Building Some economists are worried about inflation because of a jump in minimum wages plus strong credit growth.