2019.09.2505:17:00UTC+00Thailand CB Holds Key Interest Rate, Cuts Growth Forecast

Thailand's central bank left its key interest rate unchanged in September, after slashing it for the first time in over four years in the previous month, as it trimmed its growth forecasts due to the weaker outlook for exports and domestic demand.

The Monetary Policy Committee voted unanimously to hold the policy rate at 1.50 percent, the Bank of Thailand said in a statement on Wednesday.

"The Committee viewed that accommodative monetary policy stance would contribute to the continuation of economic growth and should support the rise of headline inflation toward target," the central bank said. Citing weaker exports and domestic demand, the central bank slashed the growth forecast for this year to 2.8 percent from 3.3 percent. The growth outlook for next year was lowered to 3.3 percent from 3.7 percent.

The inflation forecast for this year was cut to 0.8 percent from 1 percent and that for next year was retained at 1 percent. The core inflation forecast for this year was trimmed to 0.6 percent from 0.7 percent. The outlook for next year was maintained at 0.9 percent. The tourism sector was also forecast to expand at a slower rate. Domestic demand is expected to slow as declining household income and employment, mainly in the export-related sectors, hurt private consumption. The elevated household debts and the impact from natural disasters are also dampening consumption, the bank said. Private investment growth is also expected to slow. "With economic growth set to remain weak and concerns about the strength of the baht mounting, we think the central bank will loosen policy again before the end of the year," Capital Economics economist Gareth Leather said.