The Monetary Policy Committee (MPC) of the Bank of Thailand (BoT) voted unanimously today to maintain the benchmark policy rate at 1%, the lowest level since late 2022.
Don Nakornthab, the committee’s spokesman and assistant governor for Monetary Policy at the Bank of Thailand, said raising or lowering the rate now would pose risks to the economy, noting that inflation will be lower next year and exceed the target only temporarily.
The MPC said in its statement that Thailand’s economic expansion is projected to be moderate, because the war in the Middle East has had direct impacts on growth by increasing business costs and eroding household purchasing power. Tourism, the key driver of Thai growth, is also likely to be hit as higher fuel costs limit travel.
Economic growth is expected to fall to 1.5% this year, from a better than expected 2.4% last year, according to the MPC.
Government stimuli could add as much as 0.7% to economic growth this year. Exports are a bright spot for Thailand, seeing growth of more than 8%, lifted by strong global demand for technology products.
Thailand has room to keep borrowing costs low as headline inflation has been in negative territory for a year. In contrast, regional peers, such as Singapore and the Philippines, tightened monetary policy in April amid concerns that the oil crunch could spur higher prices across the economy.
Under the prevailing monetary policy framework, which aims to maintain price stability, support sustainable economic growth and preserve financial stability, the committee considers that the current policy rate is at an appropriate level to support economic recovery, said the statement.
