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Thailand's future monetary policy tightening would be gradual: central bank minutes

[BANGKOK] Thailand's monetary policy committee (MPC) expects any future policy tightening would be gradual after the central bank's first rate hike since 2011 in December, minutes from its last policy meeting showed on Wednesday.

The Bank of Thailand's policy committee voted 5-2 to raise the one-day repurchase rate by 25 basis points to 1.75 per cent, to curb risks to financial stability.

After the increase, the rate is still only 50 basis points above its all-time low.

The committee viewed that "accommodative monetary policy would remain appropriate in the period ahead, and that the policy rate increase would be gradual and not in a continuous manner as in the past", the minutes said.

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The MPC will next review policy on Feb 6, and most analysts expect no policy change.

After the December hike, the committee viewed that "the policy rate at 1.75 per cent would remain accommodative and conducive to growth across economic sectors", they said.

The committee thought the economy was strong enough to handle the rate increase, despite a moderation in growth.

The two dissenting members who voted against the hike argued that accommodative monetary policy remained necessary to support economic growth.

At the December meeting, the central bank cut its 2018 economic growth forecast to 4.2 per cent from 4.4 per cent and lowered its 2019 estimate to 4.0 per cent from 4.2 per cent.

Growth in 2017 was 3.9 per cent, the best in five years.

For the full minutes.