Bank of Thailand keeps rate on hold

BANGKOK • Thailand’s central bank left its benchmark interest rate unchanged, as expected, as slower inflation and a soaring currency give policymakers room to pause after December’s hike.

Four of the six members of the Monetary Policy Committee present at the meeting voted to hold the one-day bond repurchase rate at 1.75%, the Bank of Thailand (BoT) said in a statement yesterday.

Two called for a 25-basis-point hike, while one member was absent. All 21 economists surveyed by Bloomberg predicted the decision.

“The committee viewed that accommodative monetary policy would remain appropriate in the period ahead,” the BoT said, as it continues to monitor economic growth, inflation and financial stability.

After the first rate hike in seven years in December, economists see the BoT on hold this year, given subdued inflation and the US Federal Reserve’s shift to a prolonged pause in its tightening cycle. Policymakers cited financial stability risks as a reason to remain cautious.

While recent credit restrictions would help curb “vulnerabilities” in the financial system, developments in the mortgage loan market, real estate sector and rising debt in the economy “still warranted monitoring”, the bank said.

Consumer prices rose at the slowest pace in 18 months in January, gaining just 0.3% from a year ago, on the back of low oil prices and a strong baht. Inflation has undershot the central bank’s 1% to 4% target range in the past three months. The baht has surged more than 4% against the dollar this year, the best performer in a basket of major Asian currencies tracked by Bloomberg.

The central bank said the currency will remain “volatile” due to external risks. Finance Minister Apisak Tantivorawong said last week an overshooting baht will put export-reliant Thailand at a disadvantage and it is the BoT’s job to curb swings. — Bloomberg