Thailand central bank holds rates at 2.75%

Thailand's central bank held interest rates at 2.75 percent Wednesday citing a better-than-expected performance in the nation's economy last year.

The Bank of Thailand's Monetary Policy Committee, which last moved to cut rates in October 2012 to help manufacturers, said an uptick in domestic demand had helped support economic growth.

"The MPC agreed that with uncertainties in the global economy and reduced inflationary pressure, that maintaining the current interest rate is the appropriate policy to support local domestic demand for continued growth," the bank said in a statement.

The bank said the Thai economy was expected to have grown more than expected in the fourth quarter, adding it would likely revise its projections for 2013 upwards.

It said that there were signs of gradual recovery in the global economy, but expressed concern about the outlook for the European Union and Japan.

Analysts said the rate freeze was in line with expectations.

"Policy settings are likely to remain on hold in the near term," said Sukhy Ubhi of Capital Economics.

Domestic demand will be supported by a rise in the minimum wage and corporation tax cut in early 2013, Ubhi said, adding that increased global growth was expected to help Thailand's exports.

Thailand suffered devastating floods in late 2011 which took a heavy toll on its lucrative manufacturing base, but its economy has since recovered strongly.

The bank said its 2012 rate cuts had boosted confidence in the private sector and helped the country recover from the impact of the flooding by reducing the cost of borrowing.

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