BANGKOK, Dec 12 (Reuters) - Thailand's central bank warned on Wednesday that a protracted period of low interest rates could, on past experience, cause financial imbalances and said it would closely monitor credit growth, especially some types of household debt.
However, in minutes of its November policy committee meeting, it also said that although the outlook for the global economy had improved, substantial risks remained, so 'it was important to preserve policy space for such contingencies'.
The Bank of Thailand left its policy rate unchanged at 2.75 percent at a meeting on Nov. 28, taking a more optimistic view on the global economy than at the previous meeting on Oct. 17, when it surprisingly cut the rate by 25 basis points.
Overall, it said there was more risk to the growth outlook than to inflation because of global uncertainties.
'As such, an accommodative monetary policy stance was deemed necessary and appropriate to sustain ongoing economic expansion.'
However, it would need to monitor credit growth.
'If warranted, macroprudential measures could also be used along with the policy interest rate to ensure financial stability.'
It said private consumption and investment would be the main drivers of growth for now because of favourable household incomes, good employment prospects, strong consumer confidence and easy financial conditions, as seen in high credit growth.
Due to that positive domestic outlook, it said GDP growth could be slightly higher than its previous forecast, without offering new figures. It has forecast 5.7 percent for this year and 4.6 percent for 2013.
It has forecast headline inflation of 3.0 percent for 2012 and 2.8 percent for 2013. It sees core inflation, which guides monetary policy, at 2.1 percent this year and 1.7 percent next year, easily inside its target range of 0.5 to 3.0 percent.
Broadly, the central bank took the view that the global economy was stabilising and even felt that the euro zone should be more stable next year 'as crisis resolution measures should become more concrete and the economies of core countries continued to hold up'.
Even though the euro zone debt crisis and U.S. fiscal problems remained a big risk, it thought exports could pick up in the first half of 2013 and that the export sector could again take over as the main driver of the Thai economy in the latter half of the year.
(Reporting by Alan Raybould; Editing by Simon Cameron-Moore & Kim Coghill) Keywords: THAILAND ECONOMY/MINUTES
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