MPC Maintains the Policy Rate at 1.25%, Asserting to Stand Ready to Act as Appropriate

On December 18, 2019, the Monetary Policy Committee (MPC) has announced its final decision of the year with unanimously votes to maintain the policy rate at 1.25%.

 

In deliberating their policy decision, the Committee assessed that the Thai economy would expand at a lower rate than the previous forecast and below its potential due to a decline in exports which affected employment and domestic demand. Headline inflation was projected to be below the lower bound of the inflation target.

Overall financial conditions remained accommodative due to the previous two policy rate cuts. Financial stability risks had already been addressed to some extent, although there remained pockets of risks that warranted monitoring.

MPC viewed that the global economic outlook started to stabilize, resulting in an improving outlook for Thai exports and economic growth next year. Nevertheless, the economy would expand below its potential and below the previous forecast.

The Committee viewed that more accommodative monetary policy in the recent period would contribute to economic growth and support the rise of headline inflation toward the target. The Committee thus voted to maintain the policy rate at this meeting and would assess risks to the economic outlook in deliberating appropriate monetary policy going forward.

Looking ahead, the Committee would monitor developments of economic growth, inflation, and financial stability, together with associated risks, in deliberating monetary policy going forward. The Committee would stand ready to use policy tools as appropriate. In addition, the Committee would monitor structural problems that affect competitiveness and economic growth outlook, which should be firmly addressed by all related parties.