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Thailand bucks S-E Asia trend by keeping interest rates on hold

Monetary policy stability helps to support pick-up in economic growth


THAILAND'S central bank left its benchmark interest rate unchanged near a record low, bucking a regional trend as more central banks tighten policy amid a global emerging-market rout.

Five of the six monetary policy committee members present at the meeting voted to hold the one-day bond repurchase rate at 1.5 per cent, where it's been since 2015, according to a statement on the Bank of Thailand's website on Wednesday.

All 22 economists surveyed by Bloomberg predicted the decision.

Thailand has fared better than most of its regional peers as rising US interest rates and a stronger dollar prompt investors to dump higher-risk assets.

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In Indonesia and the Philippines, central banks have stepped up action to stem an outflow of foreign capital and bolster their currencies.

With Thai foreign reserve buffers of more than US$200 billion and a large current account surplus, the authorities say they don't need policy tightening just yet.

The baht has slid 0.5 per cent against the dollar this year, compared with a 6.5 per cent slump in the Philippine peso and a 2.6 per cent drop in the Indonesian rupiah.

Most economists in a Bloomberg survey predict that the Philippine central bank will raise its benchmark rate for a second month on Wednesday.

In Thailand, monetary policy stability is helping to support a pick-up in economic growth as exports climb and consumer spending strengthens.

Growth reached a five-year high of 4.8 per cent in the first quarter. Inflation climbed to 1.5 per cent in May, staying inside the central bank's target range of one per cent to four per cent for a second month.

Finance Minister Apisak Tantivorawong said this week it's not necessary for Thailand to follow the Federal Reserve in raising interest rates, echoing comments from the central bank at its last meeting. BLOOMBERG

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