MPC likely to maintain policy interest rate

Written by Writer on Monday, October 6th, 2008

MPC likely to maintain policy interest rate : KRC

BANGKOK, Oct 6 (TNA) – Given the current global economic situation, the Bank of Thailand (BoT) Monetary Policy Committee will likely keep the policy interest rate unchanged at 3.75 per cent when it meets Wednesday, according to the Kasikorn Research Center.

The leading think tank said the credit position of the global financial market had deteriorated rapidly and it is difficult to assess clearly how the situation would impact the Thai economy.

But overall, Thailand’s economic stability remains sound since the position of financial institutions here is strong and the liquidity in the financial system is high.

KRC stated that the actual 12-month deposit rate remained negative in August when compared with the inflation rate, as it was held at 4.18 per cent while inflation rose.

Regarding the policy interest rate trend, Kasikorn said that the MPC is likely to give more weight to economic growth risk than to the risk of inflation.

At the same time, the rapid changes now taking place in the credit situation in the global financial market and the fragility of economies of many countries might render it necessary for their central banks to reduce their policy interest rates.

The United States Federal Reserve might need to cut its policy interest rate ahead of the normal meeting of the MPC. These factors should not be overlooked, Kasikorn warned, as they would influence the MPC’s decisions regarding policy interest adjustments in the future. (TNA)

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