A painful choice

23 January 2014 By Andy Mukherjee

The central bank’s decision to hold interest rates steady was a close call. Political unrest is taking a toll on growth. But a rate cut could hasten capital flight amidst a rollback of the Fed’s money-printing. A weaker baht may help exports but hurt borrowers with foreign debt.

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The Bank of Thailand’s monetary policy committee voted 4-3 to keep its policy interest rate steady at 2.25 percent on Jan. 22.

The central bank pared its outlook for GDP growth this year to about 3 percent, from 4 percent previously.

Anti-government street protests, which began in early November, forced Prime Minister Yingluck Shinawatra to dissolve parliament in December.

On Jan. 22, her caretaker government announced a 60-day state of emergency in Bangkok and surrounding areas to pre-empt a surge in violence around snap polls on Feb. 2.

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