Jun. 24 – Thailand’s central bank has stated that there is no further need for cutting interest rates to assist the domestic economy during the global financial crisis because it expects positive growth to resume by the year’s end.

The bank surprised markets last month by holding firm to interest rates when analysts had predicted a 25 percent basic point cut. The views were echoed by the Thai Prime Minister Abhisit Vejjajiva, who also stated that the recent political rifts that have undermined reform can be healed.

Noting inflation in Thailand had been negative for the past six months, Vejjajiva stated that the bank, “have already brought down interest rates as far as they can go, and there is also no inflationary threat.”

Stating that he expected a stimulus package of US$12 billion to be approved by the Thai Parliament this coming Monday, he continued that, “growth should be in positive territory by Q4 and will maybe reach 2 percent during 2010.” He also announced plans to liberalize the Thai banking and financial sectors and was looking for foreign participation in the sector. “The development of Thailand’s capital markets is something we will do what we can to stimulate.”

Thailand has been one of the most badly affected nations in Asia during the financial crisis, mainly as it has been at de facto political war for much of the past three years, and policy has been difficult to move forward amongst a sharply divided consensus. Bond yields rose sharply following Vejjajiva’s comments following sentiment the government is finally unifying the country and that sustainable growth can be maintained.