Thai central bank cuts policy rate to 2% with immediate effect

The Bank of Thailand’s Monetary Policy Committee (MPC) agreed, by a 6:1 vote, to cut the policy interest rate by 25 basis points to 2%, with immediate effect.

Sakkapop Panyanukul, secretary of the MPC, said that a majority of the committee’s members agreed to the cut, to the lowest rate in two years, to be in line with economic and inflation trends and to ensure stability of the financial system.

Most agreed that economic growth is less than projections, he said, adding that one member voted to retain the current rate, to enable monetary policy to cope with the uncertainties of the future.

He said the majority of the MPC believes that the interest rate cut will help ease financial constraints, without impacting the long-term stability of the financial system, adding that the new policy rate is in line with economic growth projections and can still cope with uncertainties in the future.

Even though economic growth is below projections, most MPC members agree that tourism and exports are growing satisfactorily, but future growth is still forecast to be below projections, mainly due to structural problem in the automobile, petro chemicals and construction material production industries, plus increased competition from imports.

Domestic consumption, especially in the private sector, has a tendency to grow, while exports of products in the technological and processed agricultural segments are also forecast to rise, said Sakkapop.