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Thai Central Bank Holds Key Rate As Expected

Thailand's central bank left its key interest rate unchanged at a record low on Wednesday as uncertainties surrounding the economic outlook remained high.

The Monetary Policy Committee of Bank of Thailand unanimously decided to retain the interest rate at 0.50 percent. The bank had reduced the rate by 25 basis points in May 2020.

The committee reiterated that it stands ready to use additional appropriate monetary policy tools if necessary.

The MPC expects the economy to expand somewhat lower than the previous forecast. The bank noted that the recovery prospects remained highly uncertain, which would in the short-term depends mainly on the situation of the Covid-19 and containment measures.

Headline inflation was projected to return to the target in the middle of 2021 and would stay close to the lower bound of the target range throughout the forecast period, the bank said.

In addition to the weak economy, the other main concerns for the central bank are the strong currency and persistent deflation, Gareth Leather, an economist at Capital Economics, said. Both point in the direction of interest rates remaining low for the foreseeable future.

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