Bank of Thailand keeps key interest rate unchanged at 2.75%

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BANGKOK, Jan 9 – The Bank of Thailand is keeping the key interest rate unchanged at 2.75 per cent, and the Bt300 minimum wage rise will likely impact inflation only slightly at less than one per cent, a senior BoT official said today.

BoT Monetary Policy Committee secretary Paiboon Kittisrikangwan said the panel’s meeting voted unanimously to keep key interest unchanged at 2.75 per cent as the Thai economy in the fourth quarter is likely to expand more than previously assessed, leading to an upward growth revision for both 2012 and 2013.

The revised economic projections for 2012 and 2013 will be released on January 18, he said.

Private consumption and investment continued to be the key growth drivers supported by consumer and business confidence, favourable household income, and full employment as well as accommodative monetary conditions with continued high rates of credit growth, according to the BoT statement.

The export sector showed incipient signs of a broad‐based recovery while the service sector and tourism expanded robustly. Inflationary pressure remained stable close to the the rate at the time of the previous meeting.

The MPC assessed that the accommodative monetary policy stance throughout the previous year had significantly shored up private sector confidence, supported post‐flood recovery, and helped cushion the economy from the global economic headwinds.

The MPC said in its statement it viewed that, with remaining uncertainties in the global economy and inflation forecast within target, the current monetary policy stance was appropriate in supporting domestic demand to sustain growth momentum.

The monetary committee will continue, however, to closely monitor financial stability risks that may arise from persistently high credit growth, rising household debt, and volatile capital flows.

Regarding a possible impact from the Bt300 minimum wage, Mr Paiboon said the MPC discussed the issue and viewed that it will likely impact the inflation rate only slightly at less than one per cent. Although some operators cannot adjust to the increased wage and report that they are forced to close their doors, it will not likely cause more employment as some other businesses are facing a labour shortage, he said.