IMF says further Thai rate reduction would support inflation

BANGKOK (Reuters) - A further reduction in Thailand's policy interest rate would support inflation and improve the debt-servicing capacity of borrowers, the International Monetary Fund said.

Given high uncertainty around the economic outlook, authorities should stand ready to adjust monetary policy as needed, the Washington-based IMF said in a statement dated February 20.

It said there was little risk of a rate cut leading to increased borrowing given lending conditions remain tight in the economy.

Central bank independence with clear communication of policy moves was key to maintaining the credibility and effectiveness of monetary policy in anchoring inflation expectations, the IMF said.

In December, the Bank of Thailand left its main interest rate at 2.25% following a surprise quarter-point cut in October.

Last month, the central bank governor told Reuters the current policy rate remained suitable, given high household debt, even though growth could be below 2.9% this year.

The next policy review is scheduled for February 26.

The IMF forecast Thailand's economic growth at 2.9% this year, unchanged from a report in November.

Southeast Asia's second-largest economy expanded 2.5% last year, lagging regional peers.

(Reporting by Orathai Sriring and Thanadech Staporncharnchai; Editing by John Mair)

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