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Thai central bank maintains rate, downgrades GDP growth projections

The Bank of Thailand kept its policy rate unchanged and downgraded its economic growth projections through 2020 amid a slowdown in exports.

In a unanimous decision, the Monetary Policy Committee left the policy rate at 1.25% on Dec. 18 after lowering the rate to match 2010's record low in November.

The central bank said it revised its GDP growth forecasts to 2.5% from 2.8% for 2019 and to 2.8% from 3.3% for 2020, citing a greater-than-expected contraction in merchandise exports, which are expected to recover more slowly than anticipated.

The Bank of Thailand expects merchandise exports to decline 3.3% in 2019 compared with an earlier projection in September, for a 1.0% drop on the year. Meanwhile, exports in 2020 are now expected to increase 0.5%, compared with a 1.7% rise projected earlier.

The bank also downgraded its projections for core inflation in 2019 to 0.5% from 0.6%, and in 2020 to 0.7% from 0.9%. In addition, it anticipates lower-than-expected energy prices along with subdued global economic growth and increasing energy supply to weigh on headline inflation, whose projections were downgraded to 0.7% from 0.8% for 2019 and to 0.8% from 1.0% for 2020.

Policymakers plan to assess the effectiveness of easing certain foreign exchange regulations earlier decided in an effort to stem the Thai baht's appreciation against trading partner currencies, and they will evaluate the necessity of implementing further measures amid elevated external uncertainties.

The baht was trading 0.12% higher against the dollar at 6:10 a.m. ET on Dec. 18.