Jaturong: Trump win stunned markets
The Bank of Thailand's Monetary Policy Committee (MPC) kept its interest rate unchanged yesterday at 1.5% as expected but warned investors to brace for greater fluctuation in financial markets stemming from the policy direction announced by the new US president.
The seven-member rate-setting panel voted unanimously to stand pat, reasoning that policy space is still needed as the Thai economy faces greater uncertainty, said Jaturong Jantarangs, assistant governor of the monetary policy group and the MPC's secretary.
The Thai economy continued to expand at a pace close to the previous assessment despite higher risks on both domestic and external fronts.
Mr Jaturong said there is domestic risk in the tourism sector, stemming from the government's crackdown on zero-dollar tour operations, and the central bank now projects the move to shave off more than 200,000 from Chinese tourist arrivals, exceeding an earlier projection.
But exports, which turned a corner in August and September, are a positive for the economy, he said. Merchandise exports expanded 3.4% year-on-year in September to US$19.5 billion (683 billion baht), the highest in two years. The surge helped narrow the nine-month contraction to 0.7% year-on-year to $160 billion, reported the Commerce Ministry.
Economic growth in the first half gave the MPC space to hold the rate steady, gaining 3.2% in the first quarter and 3.5% during the second.
Financial markets are expected to be more volatile because of fragility in China, political developments in Europe and Donald Trump's stunning US presidential election victory, Mr Jaturong said.
"The Bank of Thailand is familiar with fluctuation in the financial market but we advise the private sector to be more adaptable to higher volatility, especially as pertaining to capital flows and exchange rate," he said.
"Uncertainty about policy direction will remain high before the new US government announces its policies.
"Right now, the MPC believes this election result will lead to uncertainty for the US economy and especially concerning world trade."
Mr Jaturong said the committee also expects headline inflation to return to its target later than previously projected because of supply side factors.
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