Wednesday, April 8, 2009

Thai central bank cuts rates again, likely to go lower

By Kitiphong Thaichareon

BANGKOK, April 8 (Reuters) - The Bank of Thailand cut its key interest rate by 25 basis points to 1.25 percent on Wednesday, the fourth reduction since December, and could cut further as recession looms, although analysts are divided on how much.

The International Monetary Fund says the economy could shrink by as much as 4 percent in 2009 and said this month the central bank had scope to cut rates further if needed.

Seven of 11 economists polled by Reuters last week had forecast a 25 basis point cut in the one-day repurchase rate and four predicted 50 basis points.

'The severity and duration of the crisis remained highly uncertain, which would affect the Thai economy through a contraction of exports, while private domestic demand remained weak,' Assistant Governor Duangmanee Vongpradhip told reporters.

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'Headline and core inflation continued on a declining trend, allowing monetary policy to be eased further to support the economy and stimulate the recovery going forward,' the Monetary Policy Committee (MPC) said in statement.

The MPC's core inflation target range is zero to 3.5 percent. Annual core inflation stood at 1.5 percent in March.

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