Thailand holds interest rate amid economic weakness

A worker rides on a cement tank hanging on a crane at a construction site in Bangkok, Thailand in this file photo. Thailand’s central bank on Wednesday, Aug. 21, 2013, left its benchmark interest rate at 2.5 percent amid concerns over sluggish economic growth. AP

BANGKOK—Thailand on Wednesday left its benchmark interest rate at 2.5 percent amid concerns over sluggish economic growth.

The move, which follows a trim to interest rates in May, comes after official figures showed persistent weakness in the kingdom’s economy in the first two quarters of the year.

“Continuing with monetary policy easing will support economic growth,” said Paiboon Kittisrikangwan, secretary of the Thai central bank’s Monetary Policy Committee (MPC).

Thailand has suffered two consecutive quarterly economic contractions this year, with figures Monday showing the economy shrank 0.3 percent in the three months to June compared to the previous quarter. This followed the revised 1.7 percent contraction in the three months to March.

Manufacturing output eased 1.0 percent on a year-on-year basis, with manufacturers hit by slowing domestic demand and ongoing global weakness, the National Economic and Social Development Board said in a statement, as the US and China struggle to get up to speed.

The central bank forecast gradual recoveries in the US, China and the EU, adding that there was little risk of inflation on the horizon.

Analysts at Kasikornbank said the move was expected, as policymakers seek to keep the pressure off both private sector and household borrowers.

“We expect the MPC to maintain the current rate of 2.5 percent until the end of this year,” Nalin Chutchotitham, Market and Economic Research Specialist at Kasikornbank told AFP.