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Bank of Thailand holds policy rate at 1.50%

The Bank of Thailand decided to maintain its policy rate to keep financial conditions accommodative to the country's economic growth.

In a unanimous vote, the central bank's committee maintained the policy rate at 1.50%. The bank noted that overall growth outlook improved and that financial conditions remained accommodative, with ample liquidity in the financial system and low real interest rates. It added that financial stability remained sound, with efficient cushions against economic and financial volatilities on both domestic and external fronts.

However, pockets of risks remained, including the deterioration in loan quality of some business sectors and the search-for-yield behavior under the prolonged low-interest rate environment. The central bank said exchange rates might also experience higher volatility in the period ahead due to uncertainties on the external front.

Meanwhile, the public's medium-term inflation expectations remained close to the target, as core inflation slowed down recently due to the increase in excise tax in 2016. The bank expects headline inflation to fluctuate in the near term due to base effects, and face increased downside risks due to the changes in global oil prices.