Central bank’s monetary policy committee maintains policy rate at 1.5%

The Monetary Policy Committee (MPC) of the Bank of Thailand today voted 5:2 today to maintain the policy rate at 1.5%. Two committee members voted to cut the rate by 0.25 percentage point to 1.25%, according to Sakkapop Panyanukul, the MPC secretary.

He said the committee had assessed that monetary policy should be accommodative, to support economic recovery, and that the transmission of previous policy rate cuts to the economy is still ongoing.

Most committee members placed importance on the timing and effectiveness of monetary policy, given the limited policy space, and voted to maintain the current rate, he explained.

Interest rates in the banking system and financial markets have declined, in line with previous policy rate cuts.

Overall credit growth remains contracted, however, due to weakened demand from large corporates amid heightened economic uncertainty, debt repayments and cautious lending to high credit risk borrowers, especially SMEs and low-income households.

According to the central bank, Thai economy is projected to expand in 2025 and 2026 close to previous assessments. Exports have begun to experience the impacts of US trade policies.

Meanwhile, tourism and domestic demand have slowed down, but are projected to recover gradually. Headline inflation is forecast to be lower than previous assessments, primarily due to energy and raw food prices.