Thailand cuts rates again, flood impact worse than thought

• Tweet
• Email

• Tweet
• Email

(Adds details, market reaction, economists’ comment)

* Central bank cuts policy rate by 25 bps to 3.00 pct, as expected

* Says rate cut reflects flood impact, increased global risks

* Says 2011 GDP growth to be lower than 1.8 pct seen previously

Reuters

By Orathai Sriring and Kitiphong Thaichareon

BANGKOK, Jan 25 (Reuters) – The Bank of Thailand cut its main interest rate by 25 basis points to 3.00 percent on Wednesday, as expected, saying the impact of flooding last year had been worse than expected and global economic risks had grown.

The recovery from the floods that struck industry from last October was likely to be a drawn-out process, it said, and manufacturing was only expected to return to normal by the third quarter of this year.

“Inflationary pressure declined, reflecting a more prolonged recovery in domestic demand and a slowdown in commodity prices in line with weakening global demand,” the Monetary Policy Committee said in a statement.

“Nonetheless, the boost to economic activity from reconstruction spending and various government stimulus measures could exert some upward pressure…

Full story from Reuters at http://goo.gl/scVkW