Thai c.bank holds rate, trimming GDP, export forecasts

Reuters

* Policy rate kept at 2.50 pct, last change was May cut

* Committee votes 6-0 to hold at 'still appropriate' rate

* C.bank says see lower 2013 growth, export estimates

* Most economists see no policy change for some months

By Orathai Sriring and Kitiphong Thaichareon

BANGKOK, Oct 16 (Reuters) - Thailand's central bank onWednesday left its benchmark interest rate at 2.50 percent, alevel it continues to feel is low enough to help the economyescape recession.

The Bank of Thailand (BOT) said the rate is "stillappropriate". It said the economy, which slipped into a mildrecession in April-June quarter, is stabilising, but growingslower than expected.

The central bank said it revised down its growth and exportforecasts at the meeting but the new projections will bereleased on Oct. 25. In July, the growth projection was choppedto 4.2 percent from 5.1 percent.

The Thai Finance Ministry predicts 3.7 percent growth forthis year and the Asian Development Bank recently forecast 3.8percent.

All but one of 18 economists polled by Reuters had expected the BOT's monetary policy committee (MPC) to hold the one-dayrepurchase rate on Wednesday, as it did at the pasttwo meetings. One economist predicted a 25 basis point cut.

The MPC voted 6-0 for no change. One member who is resigningfrom the committee after being named BOT board chairman wasabsent.

In a statement after the meeting, the MPC said the outlook"points to a gradual growth recovery, supported by accommodativefinancial conditions."

The benchmark rate has been steady since May, when it wascut 25 basis points due to poor growth data plus politicalpressure to tame a then-strong baht.

The baht barely moved after the central bank decision. At0804 GMT, it was at 31.25 to the dollar, compared with Tuesday'sclose of 31.27. At a peak in April, the baht was at 28.50 to thedollar.

AWAITING Q3 GDP NUMBER

Usara Wilaipich, a senior economist at Standard Charteredbank, said she expects the BOT to reduce its 2013 GDP growthforecast only slightly, to around 3.8-4.0 percent.

She also said she "continues to expect the BOT to hold therate at 2.50 percent at least until end-Q2 2014".

However, Thammarat Kittisiripat, economist at TMB Bank inBangkok, did not rule out a rate cut after third-quarter GDPdata comes out on Nov. 18. If the data is bad, the MPC at itsmeeting on Nov. 27 "will probably decide to cut the rate by 25bps to underpin growth, amid low inflationary pressure."

Thailand's inflation rate is around a four-year low. Whilethe country currently is having some flooding, the impact hasbeen limited and should not be anything like devastating 2011floods that slashed economic growth that year to 0.1 percent.

Last week, Indonesia held its benchmark reference rate for the first month since May after data eased pressureon the rupiah. The pause came after a rate hike of 150basis points, to 7.25 percent, between June and September tobattle inflation and support the rupiah.

(Additional reporting by Kitiphong Thaichareon and PairatTemphairojana; Editing by Richard Borsuk)

Rates

View Comments (0)