Thai Central Bank Holds Benchmark Rate at 0.50%

The Monetary Policy Committee (MPC) unanimously voted on Wednesday (September 29) to hold the benchmark interest rate at 0.50%, as expected by the market. The Thai economy this year and in 2022 is expected to grow at a rate close to that projected in August, but with a high degree of uncertainty. The MPC kept its forecast for GDP growth in 2021 at 0.7%, while revised its forecast for the year 2022 to 3.9%.

The MPC urges the government to introduce more stimulus packages in order to accelerate economic recovery, as well as to expedite liquidity distribution and debt restructuring for people affected by COVID-19 pandemic. The MPC believes that monetary policies will be more effective than interest rate cuts, given the current low rate. As a result, the policy rate should be maintained.

Thailand’s economy is projected to expand by 0.7% and 3.9% in 2021 and 2022, respectively, which is in line with August estimates. Although the economy was still impacted by epidemic preventive actions and exports slowed more than expected in the third quarter of 2021, the vaccine campaign has clearly progressed. Additionally, the government has eased lockdown restrictions earlier than anticipated. This will boost private confidence and consumption throughout the remainder of 2021.