(Bloomberg) -- Thailand’s central bank held its key interest rate near a record low to support economic growth that’s lagging peers in Southeast Asia.
The one-day bond repurchase rate was left at 1.5 percent, with monetary policy committee members voting unanimously in favor, the Bank of Thailand said in Bangkok on Wednesday. All 23 economists surveyed by Bloomberg predicted the decision.
Three years after the military seized power, Thailand’s economic expansion is trailing others in Southeast Asia, with the World Bank forecasting it will post the weakest growth among eight developing nations in the region. The central bank has kept rates steady since 2015, refraining from easing policy despite muted inflation pressures and calls by the International Monetary Fund to spur flagging consumption and investment. Economists predict the benchmark rate will be unchanged until the third quarter of 2018.
“We expect the BoT to keep rates on a prolonged hold,” said Krystal Tan, an economist at Capital Economics Ltd. in Singapore. “The ongoing economic recovery means there is no need for rate cuts. Equally, there is no strong impetus for rate hikes either. For a start, there are no signs that the economic recovery is generating a pick-up in price pressures.”
Monetary policy should stay accommodative and policy makers are prepared to use available tools to sustain growth while ensuring financial stability, the Bank of Thailand said in a statement. Inflation is expected to rise in the second half of the year, it said.
Consumer prices rose 0.4 percent in April from a year earlier, the slowest pace in five months. The central bank aims to keep average inflation in a range of 1 percent to 4 percent this year.
The baht is performing in line with regional currencies in the recent period, the central bank said. The statement dwelt less on the currency than the release after the March rate decision, where the bank said the baht’s appreciation against major trading partners might not be beneficial.
Pockets of risks that warranted close monitoring include the deterioration in debt serviceability of small-and-medium sized enterprises and the search-for-yield behavior that could lead to underpricing of risks, the bank said in Wednesday’s statement.