BOT expects fresh rate cut to stimulate Thai economy

BANGKOK, April 30 (TNA) - The Bank of Thailand (BOT) anticipates that its fresh move on cutting its key interest rate by another 0.25 per cent, from 1.75 per cent to 1.50 per cent, with immediate effect should help stimulate the national economic recovery. BOT Assistant Governor for Monetary Policy Mathee Supapongse told journalists that the central bank's Monetary Policy Committee (MPC) made the decision by the majority vote at its latest meeting on April 29. Mathee pointed out that the reduced repurchase rate should also weaken the value of the Thai baht, which should boost Thai exports later this year. Mathee explained although the Thai government has disbursed more budgets and domestic tourism has been picking up, they cannot make up for impacts from a slowdown in Thai exports and private consumption. According to the BOT assistant governor, Thai exports were foreseen to face more risk factors in the future and its decline might weaken investment by the private sector and household consumption; so, monetary policies should be further relaxed to stimulate the national economy. On June 19, 2015, the BOT assistant governor revealed, the central bank would again revise downwards its projections on Thailand's gross domestic product (GDP) and export growth, as well as inflation because many economic indicators are likely to drop, including Thai exports. BOT's now 1.5 per cent repo rate is the lowest one in nearly five years, after June 2, 2010 when it was cut to 1.25 per cent. Earlier this week, the Thai Cabinet approved an overall state budget of 2.72 trillion baht for the 2016 fiscal year, which starts on October 1, 2015, with a deficit of 390 billion baht and public investment set at 543 billion baht, aimed to stimulate the national economy. Meanwhile, the Thai Ministry of Commerce assessed although Thai exports have been improving with a slower export contraction and Thailand maintains market shares in major global markets, Thai exports should grow by only 0.5-1 per cent on average this year. Nuntawan Sakuntanaga, Director-General of the ministry's Department of International Trade Promotion, expressed her hope, however, that the Thai economy should pick up in the second half of this year, boosted by the gradual world economic recovery. Nuntawan did not rule out the possibility of Thailand's export growth of 1.2 per cent on average this year, as targeted. (TNA)