Benchmark rate cut by 0.25% following shaky economy and political row

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BANGKOK, 27 November 2013 The Monetary Policy Committee (MPC) has decreased the policy interest rate by 0.25% and a 2013 GDP growth forecast to 3% following the weak economy and political instability. 

Secretary-General of the MPC Paiboon Kittisrikangwarn said the committee’s meeting on Wednesday viewed that the economy tended to grow less than expected with higher risks. As household debt was likely to slow down, the committee decided to relax monetary policy more in a bid to reduce risks and support Thailand’s economic recovery.

The MPC therefore cut the policy interest rate from 2.50% to 2.25% a year to be effective immediately. The committee also decreased its GDP growth forecast for this year from 3.7% to 3% and projected that the 2014 GDP growth rate might edge down from 4.8% to 4%. The MPC however foresaw that the economy would start to recover next year.

As for the third quarter this year, the committee predicted that the economy would expand less than expected following gloomy spending in the government and private sectors and weak export recovery. The committee also warned of risks caused by slow government investment, fragile confidence of the private sector and political disturbance.