MPC cautious on rate change
- Published: 30 Apr 2013 at 20.49
- Online news:
The MPC released a statement on the meeting late last evening, saying the committee agreed "on the need for a timely implementation of appropriate policy mix as warranted by circumstances, in close coordination with the Ministry of Finance and others".
It said that despite the exchange rate appreciation of the baht, the committee expects the Thai economy to remain resilient, which is in line with the assessments of other agencies.
The committee said it was concerned over the recent volatility and rapid appreciation of the baht, which, at times, have not been justified by economic fundamentals.
Although it was the MPC's regular meeting with the central bank's officials on the monthly economic data, the market eyed it as a harbinger of whether to expect the MPC's members to cut the policy rate and attempt to tame the baht's rise ahead of its scheduled meeting for such a decision on May 29.
Recently, the government has renewed and stepped up pressure on the policy rate-setting committee to cut the rate, reasoning the currency reached a 16-year high of 28.55 per US dollar early in April, but the market's expectation of a possible rate cut and other measures has caused the currency to weaken slightly in recent days.
The MPC at its latest policy rate call on April 3 kept the rate unchanged at 2.75% for a fourth straight meeting, citing concern about rising household debt and inflation.
The FTI has cut its 2013 export growth target to 4.9% from 6.9% following the recent rise of the baht, far lower than the Commerce Ministry's target. A two-per cent cut in the export growth translates to US$47.5 billion, he said.
The new export growth target is based on a baht rate of 28.90 to the dollar.