March 27, 2017 / 8:04 AM / 3 years ago

Thai central bank seen holding key rate, letting govt spending aid economy: Reuters poll

Thailand's central bank is seen at the Bank of Thailand in Bangkok, Thailand in this April 26, 2016 file photo. REUTERS/Jorge Silva/File Photo

BANGKOK (Reuters) - Thailand’s central bank on Wednesday will leave its already-low benchmark interest rate where it has been for nearly two years, a Reuters poll showed, letting government spending support a fragile economic recovery while inflation remains benign.

All 24 economists in the survey forecast that the Bank of Thailand (BOT)’s one-day repurchase rate will be kept at 1.50 percent when its monetary policy committee (MPC) meets.

Thailand’s last rate change, a 25-basis-point cut, was in April 2015. The benchmark rate is just a quarter-point above the record low reached in 2009.

The ruling junta has accelerated investment and planned an extra budget of 190 billion baht ($5.52 billion) for the fiscal year ending Sept. 30, to lift growth in Southeast Asia’s second-largest economy, which has lagged regional peers.

On March 16, BOT Deputy Governor Mathee Supapongse said monetary policy remained accommodative for the economic recovery.

At its Feb. 8 meeting, the MPC voted unanimously to hold the policy rate, saying the economy had started to gain traction but uncertainties remained.

Twelve of 16 analysts in the poll forecast no rate change throughout 2017 while four others projected a hike in the second half to ease inflationary pressure and curb fund outflows in response to higher U.S. interest rates.

Inflation in Thailand is ticking up but still low, with an annual rate of 1.44 percent in February, inside the BOT’s 1-4 percent target range.

The BOT has forecast economic growth of 3.2 percent this year, with flat exports. It gives new projections on Wednesday.

Reporting by Orathai Sriring and Shaloo Shrivastava in BENGALURU; Editing by Richard Borsuk

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