11 July 2024

The Bank of Thailand’s Monetary Policy Committee (MPC) voted six to one to retain the policy rate at 2.50% for the fourth consecutive time, despite repeated calls from the government to lower it by 0.25% to help borrowers.

One MPC member did vote to cut the one-day repurchase rate by 0.25%.

According to the MPC’s statement, most committee members deem the current policy interest rate to be consistent with the economic situation, as well as being conducive to safeguarding macro-financial stability.

The Thai economy is projected to expand by 2.6% this year and 3.0% next. This year’s economic growth is being driven by stronger-than-expected domestic demand in the first quarter, continued recovery in tourism and the acceleration of fiscal budget disbursement during the second quarter, according to the statement.

Exports will continue to grow at a subdued level, however, reflecting structural headwinds, especially a decrease in competitiveness. Certain products, particularly in the automotive sector, face an increasing slowdown in foreign demand. Export and production recoveries are facing uncertainty, but overall financial conditions remain stable.

The high level of household debt remains an issue of concern for the MPC, as the committee views that credit growth should be consistent with the ongoing debt deleveraging, to foster long-term financial stability.

Photo : Bank of Thailand