BANGKOK, Oct 19 – The decision by the central bank’s Monetary Policy Committee (MPC) to slash the policy interest rate from 3 per cent to 2.75 per cent is no precedent for a declining interest rate, according to Bank of Thailand (BoT) governor Prasarn Trairatvorakul.
The MPC voted 5 to 2 on Wednesday to cut the policy interest rate by 0.25 per cent—an action which Mr Prasarn said was to prevent negative economic impact on Thailand given the global economic slowdown.
He likened the measure to buying life insurance and indicated that the International Monetary Fund (IMF) has warned new countries including Thailand to be cautious and wisely maintain their economic and monetary stability.
“The global economic landscape remains unclear,” the BoT governor said. “It may be better or worse. It should be clearer early next year.”
He said Thailand’s GDP will expand at 5.7 per cent as projected.
Commercial banks will have to thoroughly study relevant information before deciding if they will reduce their own interest rates, Mr Prasarn said.
