Bank of Thailand cuts policy interest rate 0.25%

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BANGKOK, May 29 – The Bank of Thailand (BoT) Monetary Policy Committee (MPC) voted unanimously to reduce the policy rate by 0.25 per cent from 2.75 to 2.50 per cent with immediate effect.

It is the first policy interest rate change in seven months since October 17 last year.

MPC Secretary Paiboon Kittisrikangwan announced the outcome of the Tuesday and Wednesday meetings today.

Global economic recovery has been slower than expected. The Thai economy in the first quarter of this year grew less than expected due to tepid domestic demand, which could weigh on overall economic momentum particularly if there is delay in government’s infrastructure investment expected to start later this year, the BoT said in its statement.

Exports are subject to downside risks from growth moderation in regional economies, especially China. Inflationary pressure eased further owing to lower production costs, while growth of private credit and household debts remained elevated.

As inflation remains well within the target, monetary policy has room to further cushion against downside risks to domestic demand.

Against the backdrop of continued financial stability concerns, the MPC will closely monitor Thai economic developments, financial stability risks as well as the capital flow situation, and stand ready to take appropriate action as warranted.

Meanwhile, Payungsak Chartsutthipol, president of the Federation of Thai Industries (FTI ), commented that the BoT decision is not what the FTI expected. It had expected the BoT to cut the policy interest rate by 0.50 per cent. However, the 0.25 per cent reduction is not a disappointment.

The FTI president said he viewed that the BoT judged that the rate is adequate to handle the economy and hoped that the central bank could cut the rate further in the future.