BANGKOK — Thailand’s central bank on Wednesday left its benchmark interest rate unchanged at 2.50 percent, pausing after making the first reduction in borrowing costs in seven months in May to bolster the flagging economy.
A slowdown in China has offset signs of improvement in the US and Japanese economies, while domestic private consumption weakened in the face of rising debt worries and the waning effect of measures to stimulate consumer spending, the Bank of Thailand said.
While Thai economic fundamentals such as employment and income remain sound, fast-changing global economic conditions as well as risks to domestic financial stability warrant “close monitoring”, it added.
Thailand’s economy shrank 2.2 percent in the three months to March from the previous quarter — the first contraction in more than a year — as manufacturing output fell.
The unexpectedly weak performance followed a strong year-long recovery from devastating floods in late 2011 that hit major factories and caused a double-digit drop in gross domestic product.
Charl Kengchon, managing director at Kasikorn Research Center, said Wednesday’s decision to leave monetary policy unchanged was expected as the central bank is likely to wait to see the impact of the May rate cut before taking any further action.
“It’s in line with most market expectations because our economy is not in good shape and the bank has said it will revise down its growth forecast,” he said.