Bangkok, The MPC has decided to maintain the policy interest rate at 2.50 percent per year, assessing the Thai economy in 2024 as likely to expand at a slower pace from the export and manufacturing sectors. This is due to slow global demand and Chinese economic recovery. Mr. Piti Disayathat, Secretary of the Monetary Policy Committee (MPC), announced the results of the MPC meeting on February 7, 2024. The Committee voted 5 to 2 to maintain the policy interest rate at 2.50 percent. year, with 2 votes agreeing that the policy interest rate should be reduced by 0.25 percent per year. The Thai economy in 2024 is likely to expand at a slower pace from the export and manufacturing sectors. This is due to slow global demand and Chinese economic recovery. Including structural factors affecting the expansion of industrial and tourism exports more than estimated. But domestic demand continues to expand and is an important driving force of the economy. Inflation rate is low. It is likely to gradually increase towards the target frame more slowly than expected. The Committee assessed that the economic expansion has slowed down in the past. This is mostly due to less momentum from the international sector and the impact of structural factors. But consumption continues to expand well. Meanwhile, interest rates remain at a level consistent with maintaining economic and financial stability. This is an important foundation for long-term sustainable growth. The majority of committee members therefore agreed that the policy interest rate should be maintained at this meeting. While two committee members agreed that the interest rate should be reduced by 0.25 percent per year to be in line with the lower economic expansion potential due to structural factors. The Thai economy at the end of 2023 expanded more slowly than expected. from merchandise exports and production that have recovered slowly following global trade conditions and high levels of inventories. Changing the behavior of foreign tourists that causes income per person to be lower than in the past and decreased public investment during the delay in the annual budget. Reduced economic momentum at the end of 2023 results in the expansion of the Thai economy in 2024 decreasing and is expected to be in the range of 2.5-3 percent, with private consumption and the tourism sector still important driving force Meanwhile, exports and production tend to expand gradually. Partly from global demand and the Thai electronic product cycle that recovered more slowly than expected. looking forward Structural problems, especially the country's competitiveness, will be more of an obstacle. If there is no economic structural reform General inflation is likely to be lower than estimated. from supply factors both fresh food prices and energy prices Including the expansion of government living cost assistance measures. The current low inflation rate does not indicate weak demand. The prices of products have not decreased widely. but reflects specific factors in certain product groups. And if ded ucting the results of the government's cost of living assistance measures Headline inflation remains positive. General inflation in 2024 is likely to remain low near 1 percent before gradually increasing next year. Meanwhile, core inflation is likely to remain close to the previous level. We still need to monitor conflicts in the Middle East that may affect energy prices. Impact on agricultural product prices from climate change and government measures to help with living expenses The overall financial system is stable. Commercial banks have strong levels of capital and reserves. As for fundraising through the bond market, overall operations continue as usual. Although some issuers of high-risk debt instruments were unable to raise funds to replace bonds that had matured (rollover) in full, the Committee places importance on overseeing the credit quality of SMEs and vulnerable households whose incomes are still low. Slow recovery By supporting the BoT's policy that encourages financial institutions Continue to carry out debt restructuring measures. Including targeted measures and sustainable debt solutions for vulnerable groups. Especially measures for providing loans in a responsible and fair manner (Responsible Lending). The overall financial condition is stable. Private sector borrowing costs through commercial banks and the bond market are similar to before. The business sector and households as a whole continue to receive new loans. Meanwhile, the loan outstanding decreased slightly due mainly to debt repayment. Overall, entrepreneurs are still able to repay debts as usual. Although income recovery is gradual and raw material costs are high, small businesses in some industries may face tight credit conditions following the caution of financial institutions. As for the exchange rate of the baht against the US dollar since the beginning of 2024, it has depreciated in line with regional currencies. It is important to predict the direction of monetary policy of the US Federal Reserve under the framework of mon etary policy that aims to maintain price stability. along with taking care of the economy to grow sustainably and maintain stability in the financial system. The Committee assessed that the expansion of the Thai economy is likely to slow down. It is a result of foreign factors and structural problems. Meanwhile, domestic demand continues to gain momentum and inflation tends to gradually increase towards the target range. The current interest rate is still in line with the expansion of the economy. as well as facilitating the maintenance of long-term economic and financial stability However, the Committee is of the view that there is still high uncertainty in the period ahead. from economic cycle factors and structural factors The implementation of monetary policy in the period ahead will be considered to be appropriate to the economic and inflation trends. Source: Thai News Agency