The Bank of Thailand said risks to financial stability, including high levels of household debt, have reduced the scope for further monetary easing, even as it cut its growth forecast for the second time this year.
The central bank pared its estimate for gross domestic product growth this year to 3.7 percent, compared with a July projection of 4 percent, and said exports may expand 1 percent, down from an earlier forecast of 4 percent.
Thailand kept its benchmark interest rate unchanged for a third meeting on Oct. 16, and “there is no need to ease monetary policy further because there are still risks to financial stability,” Assistant Governor Paiboon Kittisrikangwan said today at a briefing in Bangkok.
A slowdown in private consumption and exports, and delays in government spending on infrastructure will remain a drag in the second half, Paiboon said.
The economy is expected to stabilize, and may recover by early next year, he said. The plan to keep borrowing costs on hold clashes with the view of Finance Minister Kittiratt Na-Ranong, who earlier this month said the benchmark interest rate is “too high.”
The economy unexpectedly contracted 0.3 percent in the three months through June from the previous quarter, when it shrank by 1.7 percent, official data showed.
“Even as the economy recovers from a recession, we see very limited risk of the BoT tightening policy, as it will want to ensure that the recovery is entrenched,” Rahul Bajoria, a Singapore-based economist at Barclays Plc, said in a note.
“Further measures to restrict household lending are unlikely, but credit disbursement may only start picking up toward the end of 2013 or in early 2014, which would allow the central bank to maintain an accommodative monetary policy stance.”
The central bank today said the current account is forecast to post a deficit of $6.8 billion this year, compared with a $1.7 billion surplus predicted earlier.
Thai exports slumped 7.1 percent in September, according to a separate report today from the commerce ministry. That compared with the median estimate in a Bloomberg survey for a 0.5 percent gain.
bloomberg.com
The central bank pared its estimate for gross domestic product growth this year to 3.7 percent, compared with a July projection of 4 percent, and said exports may expand 1 percent, down from an earlier forecast of 4 percent.
Thailand kept its benchmark interest rate unchanged for a third meeting on Oct. 16, and “there is no need to ease monetary policy further because there are still risks to financial stability,” Assistant Governor Paiboon Kittisrikangwan said today at a briefing in Bangkok.
A slowdown in private consumption and exports, and delays in government spending on infrastructure will remain a drag in the second half, Paiboon said.
The economy is expected to stabilize, and may recover by early next year, he said. The plan to keep borrowing costs on hold clashes with the view of Finance Minister Kittiratt Na-Ranong, who earlier this month said the benchmark interest rate is “too high.”
The economy unexpectedly contracted 0.3 percent in the three months through June from the previous quarter, when it shrank by 1.7 percent, official data showed.
“Even as the economy recovers from a recession, we see very limited risk of the BoT tightening policy, as it will want to ensure that the recovery is entrenched,” Rahul Bajoria, a Singapore-based economist at Barclays Plc, said in a note.
“Further measures to restrict household lending are unlikely, but credit disbursement may only start picking up toward the end of 2013 or in early 2014, which would allow the central bank to maintain an accommodative monetary policy stance.”
The central bank today said the current account is forecast to post a deficit of $6.8 billion this year, compared with a $1.7 billion surplus predicted earlier.
Thai exports slumped 7.1 percent in September, according to a separate report today from the commerce ministry. That compared with the median estimate in a Bloomberg survey for a 0.5 percent gain.
bloomberg.com
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