The Bank of Thailand's Monetary Policy Committee has voted five to two to maintain the repurchase rate at three per cent, with the dissenting voices keen on cuts.
MPC secretary Paiboon Kittisrikangwan said on Wednesday that five members were of the view the current interest rate is appropriate for economic growth because the interest rate should remain lower than the inflation rate throughout the year.
The members who voted to keep the interest rate on hold see the economic problems in the United States and Europe as long-term structural problems. Therefore the MPC should keep monetary space for future needs," Mr Paiboon said.
He said the BoT cut the economic growth forecast for this year to 5.7 per cent from the 6.0 per cent projected three months ago. It also reduced the growth forecast for 2013 to 5.0 per cent from 5.4 per cent, in line with the weakening world economic outlook.
The central bank has reduced the headline inflation forcast, as measured by the consumer price index, to 2.9 per cent from 3.3 per cent for this year, he said. The core inflation forecast for this year stays at 2.2 per cent.
He said the policy interest rate excluding inflation remains close to zero and is among the lowest in Asia.
"If the situation becomes worse than anticipated the MPC is ready to take stronger-than-expected action," Mr Paiboon said.
Deputy Commerce Minister Phum Sarapol said the value of exports in June was down 2.5 per cent on the same month last year, standing at US$20.13 billion.
Imports for the month totalled $20.68 billion, up 4.41 per cent, resulting in a total trade deficit of $550 million.
Exports over the first six months of the year were down from the same period last year by 1.66 per cent to $112.62 billion, while imports rose 10.28 per cent to $122.96 billion, posting a trade deficit of $10.34 billion, a record high.
Mr Phum attributed the huge trade deficit over the first half of the year to large imports of oil, capital goods and machinery to replace the flood damaged equipment.
"If the eurozone debt crisis fails to improve, average monthly exports over the second half will be around $20 billion," the minister said.
He said the main factor that hurt exports in June was the continued debt crisis in Europe which affected production and sales of products in many countries, particularly Japan, countries in the European Union, South Asia, South Korea, Taiwan and Russia. These major trade partners imported fewer products from Thailand as a result.
The sharp rise in June imports was caused by a 34.5 per cent increase in imports of energy and 11.9 per cent rise in capital goods, he said.
The Commerce Ministry would maintain its export growth target for the year, previously set at 15 per cent, he said.
The ministry will work to boost exports by looking for more new markets and launching export promotion campaigns, both in Thailand and overseas, he added.
25 July 2012