11 July 2024

The country’s Monetary Policy Committee (MPC), one of the main committees of the Bank of Thailand, decided today (Wednesday), by a vote of 6 to 1, to increase the policy rate by 0.25%, to 0.75%, with immediate effect.

MPC Secretary Piti Disyatat said that they have assessed the overall economic situation and believe that the economy has a tendency to rebound and will return to a pre-COVID-19 condition by the end of this year. There is, therefore, no need to ease monetary policy further to accommodate the pandemic.

He disclosed that one of the committee members suggested that the rate should be increased by 0.5%, to reduce the risk of having to make a further adjustment in the near future.

The committee detected clear signs of economic recovery in the increasing number of foreign arrivals, adding that the employment situation has picked up, as well and household income increasing.

Piti said the committee has forecast that inflation for the whole year will be close to the previous projection and is expected to remain high for a period before it declines.

The committee considers that the overall financial system is stable, with ample liquidity, although distribution may vary across parts of the economy, while the ability to service debt by the business and household sectors has improved.

For low-income households and struggling small and medium size enterprises (SMEs), the committee has suggested continuing debt restructuring, or debt refinancing, to get them back on their feet.

The Thai baht remains weak against the US dollar, due to concerns over the global economic slowdown and the financial policy of the US Federal Reserve, but the committee will keep a close watch on the foreign exchange situation.

At the last meeting, on March 30th, the committee decided unanimously to keep the policy rate at record low of 0.5%.