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


© Reuters. FILEPHOTO: The Bank of Thailand is Bangkok’s main bank. April 26, 2016, Thailand. 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 and the Southeast Asian country will soon reopen to more vaccinated visitors.

Bank of Thailand (BOT), maintained 0.7% economic growth forecast for 2020 and predicted 200,000 international tourists in 2019.

The Bank of Thailand (BOT) increased its growth forecast to 3.9% for 2022 from the 3.7% predicted in August and projected 6 million international visitors.

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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 after its policy meeting.

After three cuts in 2020 due to the COVID-19 pandemic, the BOT’s Monetary Policy Committee unanimously approved the holding of the one-day rate for repurchase at 0.50%.

According to Reuters, twenty-three of 23 economists polled believed the BOT would hold its course. The others expected a quarter-point reduction.

We are removing the rate cut that we had originally planned for this year. Capital Economics reported that rates hikes were likely to be delayed due to the current economic state.

BOT stated that monetary policy should remain accommodating and that it was necessary to accelerate fiscal support for the recovery.

The BOT stated that the committee believed financial measures were more efficient than further reductions in the policy interest rate.

The BOT recently said it backed the government’s increased public debt ceiling for more fiscal flexibility to support Southeast Asia’s second-largest economy.

According to the central bank, it will closely watch the baht. It is the currency that has been emerging Asia’s most poor performer. The baht has declined by about 11% against USD so far in this year.

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