Thai central bank holds key rate as economy recovers from COVID-19 slump

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Economy6 minutes ago (Sep 29, 2021 05:18AM ET)

(C) Reuters. FILE PHOTO: Thailand’s central bank is seen at the Bank of Thailand in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva/File Photo/File Photo

By Orathai Sriring and Satawasin Staporncharnchai

BANGKOK (Reuters) – Thailand’s central bank left its key interest rate unchanged at a record low and maintained its 2021 economic growth forecast on Wednesday, saying a relaxation of pandemic curbs and a steady vaccine rollout will help the recovery.

Thailand’s worst coronavirus outbreak led to restrictions in July and August, but the curbs have since been relaxed https://www.reuters.com/business/healthcare-pharmaceuticals/thailand-allow-local-flights-resume-covid-risk-areas-2021-08-29 and the Southeast Asian country will soon reopen to more vaccinated visitors.

The Bank of Thailand (BOT) maintained its 2021 economic growth outlook at 0.7%, and said it expected 200,000 foreign tourists this year.

For 2022, it raised its growth outlook to 3.9% from 3.7% forecast in August, and predicted 6 million foreign visitors.

While uncertainties surrounding the economic outlook remained high, “progress on vaccination and earlier-than-expected relaxation of the containment measures would help support the economy in the period ahead,” the BOT said in a statement https://www.bot.or.th/English/PressandSpeeches/Press/2021/Pages/n6964.aspx after its policy meeting.

The BOT’s monetary policy committee unanimously voted to hold the one-day repurchase rate at 0.50% for an 11th straight meeting after three reductions in 2020 to mitigate the impact of the COVID-19 pandemic.

Twenty of 23 economists in a Reuters poll had expected the BOT to stay on hold while the others predicted a quarter-point cut.

“We are taking out the rate cut we originally had pencilled in for this year. But the poor state of the economy means rate hikes are a long way off,” Capital Economics said in a report.

The BOT said monetary policy will remain accommodative and that fiscal measures must be expedited to support the recovery.

“The committee viewed that financial measures would be more effective than a further reduction in the policy rate, which was already low,” the BOT said.

The BOT recently said it backed the government’s increased public debt ceiling https://www.reuters.com/world/asia-pacific/thailand-raises-public-debt-ceiling-fight-covid-19-outbreak-2021-09-20 for more fiscal flexibility to support Southeast Asia’s second-largest economy.

The central bank said it would closely monitor the baht. The currency, emerging Asia’s worst performer, has depreciated about 11% against the dollar so far this year.

Thai central bank holds key rate as economy recovers from COVID-19 slump

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