Four members of the Bank of Thailand's Monetary Policy Committee (MPC) decided on Wednesday to maintain the policy rate at 2.25 per cent, though three members voted for a cut in light of political impasse.
BOT Governor Prasarn Trairatvorakul, as chairman of the MPC, said that the current rate is accommodative and appropriately supportive of economic recovery.
The Monetary Policy Committee, which rules on the policy rate, however viewed that the ongoing political situation poses risks to growth, but sound economic fundamentals should help the economy weather these short-term risks. In addition, safeguarding financial stability remains a cornerstone for economic recovery in the period ahead.
The three members voted to reduce the policy rate by a 0.25 percentage point to cushion the economy against rising downside risks to growth, given contained inflationary pressure.
"The MPC will closely monitor developments of the Thai economy and stand ready to take appropriate actions as warranted," Prasarn said.
At the meeting, the MPC viewed that the global economy continued to recover since the last meeting. G3 economies showed signs of gradual improvement, led by the US economy which expanded on the back of stronger domestic demand. The Chinese economy expanded steadily, while exports of Asian economies, particularly in North Asia, began to recover at a gradual pace.
The Thai economy in the fourth quarter of 2013 is expected to grow less than previously assessed as a result of soft domestic demand, leading to lower-than-expected growth for 2013. The ongoing political situation continued to dent private confidence, weighing on overall outlook for growth. Exports expanded at a subdued pace, despite signs of recovery in some sectors.