(Bloomberg) -- The Bank of Thailand left its benchmark interest rate unchanged on Wednesday, as expected, providing policy stability to investors days before the nation’s first election since a military coup five years ago.

The Monetary Policy Committee voted unanimously to hold its policy rate at 1.75 percent, the Bank of Thailand said in a statement on Wednesday. All 21 economists surveyed by Bloomberg predicted the decision.

Key Insights

  • Thailand’s central bank hiked rates by 25 basis points in December, joining peers in the region in tightening monetary policy as U.S. rates rose. With the Federal Reserve now turning more cautious on rate hikes and inflation risks subsiding across Southeast Asia, central banks are adopting a wait-and-see approach on future moves
  • While the MPC flagged the possibility of another interest-rate increase last month, policy makers are proceeding slowly. Don Nakornthab, a senior director at the BoT, said last week the shift away from policy tightening globally is making it more difficult for the central bank to hike rates, while an MPC member said in an interview the odds of another rate hike were low
  • Inflation remains subdued at under 1 percent, below the central bank’s 1 percent to 4 percent target band
  • Uncertainty about the outcome of the March 24 election is rising. Foreign investors have pulled out about a net $700 million from the nation’s stock and bond markets so far this year, while the benchmark SET index has underperformed peers in the Asia Pacific in that period

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  • The baht gained 2.6 percent against the dollar so far this year, the best performer in Asia, underpinned by the country’s large current account surplus and substantial reserve cushion

To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

To contact the editors responsible for this story: Sunil Jagtiani at sjagtiani@bloomberg.net, Nasreen Seria

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