Thailand holds benchmark interest rate after two unexpected cuts

[BANGKOK] Thailand's central bank held its benchmark interest rate after the government signalled borrowing costs may be low enough following two unexpected cuts.

The Bank of Thailand held its one-day bond repurchase rate at 1.5 per cent, with monetary policy committee members voting unanimously in favor, it said in Bangkok on Wednesday. Twenty economists surveyed by Bloomberg predicted the decision, while one forecast a quarter of a percentage point cut.

Finance Minister Sommai Phasee said last week there is no need for further rate cuts as they will hurt savers, while Deputy Governor Paiboon Kittisrikangwan earlier said additional easing would do little to boost expansion. The government has pledged to accelerate spending to boost consumption and counter falling exports in Southeast Asia's second-largest economy.

"The BoT is likely to wait for the pass-through effects of the two consecutive rate cuts in March and April on the economy, before making any further moves," Usara Wilaipich, a Bangkok- based economist at Standard Chartered Plc, said before the decision. Also, "a recent weaker Thai baht should reduce pressure on additional rate cuts, at least for now."

The central bank earlier said it may cut its economic growth forecast for this year from 3.8 per cent. The finance ministry lowered its estimate in April to 3.7 per cent.

BLOOMBERG