Thailand Holds Key Rate Steady For Tenth Session

(RTTNews) - Thailand's central bank held its key interest rate unchanged in August for a tenth consecutive policy session, citing that accommodative policy stance remained conducive for economic recovery amid the greater risk of global uncertainties.

The Monetary Policy Committee voted unanimously to maintain the policy rate at 1.50 percent, the Bank of Thailand said in a statement on Wednesday. The decision was in line with economists' expectations.

The benchmark rate has been at the current level since April 2015, when it was reduced by a quarter basis point.

"The Committee saw the need to preserve policy space given that the Thai economy would still be facing more uncertainties going forward, particularly the fragile global economic recovery, and uncertainties in the monetary policy directions of major advanced economies that might induce greater capital flow and exchange rate volatility," the central bank said.

"Going forward, the Committee viewed that monetary policy should remain accommodative, and stands ready to utilize an appropriate mix of available policy tools in order to ensure that monetary conditions are conducive to the economic recovery, while ensuring financial stability."

Downside risks facing the Thai economy could arise from uncertainties following the "Brexit", concerns over the European financial sector, and political developments abroad, and persistent financial stability risks in China, which could impact confidence and the economic outlook of trading partners going forward, the bank said.

While headline inflation would still gradually rise, the timing of its return to the target band might be delayed, depending on global oil price movements, the bank added.

Further, the bank pointed out that certain business sectors continued to face constraints in obtaining credit and the recent appreciation in the baht was not favorable for the ongoing economic recovery.

"In addition, financial stability risks from the prolonged low interest rate environment, including search-for-yield behavior, continued to warrant close monitoring," the BoT said.