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Thai finance ministry says it doesn't expect any more rate hikes

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Thailand's central bank is expected to leave its benchmark interest rate unchanged this year, following December's quarter-point increase to 1.75 per cent, the first hike since 2011.

[BANGKOK] It's one and done for the Bank of Thailand, as far as the country's Finance Ministry is concerned.

The head of the department's Fiscal Policy Office said the central bank is expected to leave its benchmark interest rate unchanged this year, following December's quarter-point increase to 1.75 per cent, the first hike since 2011.

"We don't want the rate to be raised further," Lavaron Sangsnit said in an interview Tuesday, while adding monetary-policy decisions are solely the Bank of Thailand's responsibility. "The economic situation hasn't turned out as well as we'd expected, so the policy rate is one factor that can help growth."

Thailand's export-reliant economy faces headwinds from a slowdown in global expansion, the impact of the US-China trade war and an appreciation in the baht. The central bank raised borrowing costs last month to build monetary-policy space for the future and curb risks in the financial sector, but has also stressed its decisions are data dependent.

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The baht has climbed 5.4 per cent against the dollar in the past six months, the strongest performer in the world for that period, according to data compiled by Bloomberg. The currency's appreciation is a worry, Mr Lavaron said.

"We're quite concerned as baht strength may hurt exports," he said. "But the central bank is taking care of this issue. While we don't want the baht to be too strong, we don't have any level in mind."

The fiscal policy office expects the baht to average 32.25 against the dollar this year. It estimates the economy expanded 4.1 per cent to 4.2 per cent last year, and projects 4 per cent growth in 2019. Mr Lavaron will officially announce the forecasts next week.

BLOOMBERG