The Bank of Thailand logo is seen in Bangkok, April 26, 2016 (Reuters file photo)
Thailand’s central bank maintained its benchmark interest rate for a fourth consecutive meeting on Wednesday, as widely expected, while lowering its forecast for economic growth and not forecasting any increase in exports this year.
The Bank of Thailand’s (BoT) Monetary Policy Committee unanimously voted to keep the overnight rate at 1.75%.
In a Reuters poll, 14 out of 15 economists had predicted no policy change while the other predicted a quarter point decline.
The BoT now expects economic growth of 3.3% in 2019 instead of 3.8% three months ago. He expects exports to be stable, compared to a 3.0% increase seen earlier.
In 2018, the economy grew 4.1%, the highest rate in six years.
After delivering its first hike since 2011 in December, the BoT kept its key rate unchanged, concerned about still high household debt and financial stability risks.
Titanun Mallikamas, secretary of the monetary policy committee, said the central bank’s policy “is neutral and will depend on data in the future.”
Pressure is mounting on policymakers to relax as growth weakens. Exports from the trade-dependent economy fell in May, while manufacturing and tourism also contracted. Economic growth of 2.8% in the first quarter was the slowest since 2014.
The appreciation of the baht also undermines growth. It has gained 2.5% against the dollar over the past three months, the highest among emerging markets tracked by Bloomberg.
Mr Titanun said the central bank will tighten up its mechanism for handling the baht and has already “taken over” the baht to some extent.
The central bank has instruments ready to manage the strength of the baht, which could be introduced “before long,” he said.
Inflation remains subdued and has remained within the BoT’s 1-4% target range since March. The Commerce Ministry said price growth could accelerate in the second half of the year. The central bank is forecasting headline inflation of 1.0% this year, identical to its March projection.
Regional central banks from India to New Zealand have cut interest rates in recent weeks to boost their economies amid an escalating US-China trade war.
Deputy Prime Minister Somkid Jatusripitak said hours before the rate decision that the BoT will soon have to cut rates because “it cannot go against the trend” if the economy continues to weaken.