Thailand's central bank said yesterday it was considering following Malaysia in raising rates from record lows to return policy to normal settings but the domestic political crisis made the timing highly uncertain.
It left its key policy rate unchanged at 1.25 per cent and said it will consider adjusting rates to "more normal levels" now that the economy faced fewer risks.
That was similar to language used by the central bank in Malaysia preceding its surprise decision last week to raise interest rates for the first time since the global financial crisis prompted monetary authorities globally to slash the cost of borrowing.
But the Bank of Thailand said Malaysia was just one of many factors in its policy review and, importantly, its decision would also be dictated by the country's political situation.
Officials are worried by the prospect of civil unrest spreading due to anti-government protests this weekend, which could impact the economy and confidence. "There is high political uncertainty, therefore it is prudent to hold rates and wait to clearly see an impact as well as economic data," said Paiboon Kittisrikangwan, Bank of Thailand Assistant Governor. "If there is no event that severely affects the economy, there is a high chance that the MPC will gradually adjusting rates to normal levels."