BANGKOK, May 23 (NNN-Bernama) — Heightened political uncertainties after the inconclusive March 24 general election in Thailand may weigh on the country’s economic growth, said the Bank of Thailand (BoT).
In minutes of the Monetary Policy Committee (MPC) meeting early this month, the bank said investors remained cautious to invest in Thai assets partly due to domestic political uncertainties.
It said the political uncertainties could affect investment in significant infrastructure projects and have knock-on effects on private investment.
BoT said there were risks to financial stability that warranted close monitoring.
“In addition, global economic and domestic uncertainties will remain high in the period ahead. Therefore, the committee unanimously voted to keep the policy rate unchanged at this meeting in order to assess the clarity of impacts from such uncertainties,” it said.
At the May 8 meeting, the BoT policy makers kept the benchmark interest rate at 1.75 per cent, in contrast to Bank Negara Malaysia which reduced its policy rate just a day earlier.
In the minutes, BoT said the Thai economy was expected to expand at a slower pace than previously assessed owing to a slowdown in the growth of merchandise exports and investment; however, domestic consumption was expected to continue expanding.
Meanwhile, headline inflation is projected to be consistent with the lower bound of the inflation target.
While acknowledging the need to monitor risks to financial stability, BoT said: “Overall, financial conditions remained accommodative and conducive to economic growth.”
Meanwhile, the central bank said its MPC would need to wait and assess the clarity of various factors due to heightened global economic and domestic uncertainties.
“Therefore, current accommodative policy would remain appropriate.
“Going forward, further policy rate adjustment would be gradual and follow a data-dependent approach, with a careful assessment of the outlook for growth, inflation, and financial stability, together with associated risks, in deliberating appropriate monetary policy in the period ahead,” it added.