Central bank maintains policy rate at one percent

The Monetary Policy Committee (MPC) of the Bank of Thailand voted unanimously today to maintain the policy rate at 1%.

MPC secretary, Don Nakornthab, said that the committee views that the current policy rate is appropriate to support economic recovery, adding they assessed that economic expansion is projected to be stronger than previously anticipated, but growth remains slow and uneven.

Inflation is expected to rise due to supply-side factors, but will subsequently fall once the supply-side pressures gradually ease, he said, adding that overall credit growth remains subdued, with the need to continue monitoring loan quality of SMEs and vulnerable households.

The committee has also assessed that an accommodative monetary policy stance, coupled with targeted financial measures, have helped to support the economic recovery and, therefore, decided to maintain the policy rate and will closely monitor inflation and medium-term inflation expectations.

Headline inflation in 2026 and 2027 remains in line with the previous assessment, averaging 2.8% and 1.4%, but inflation for the remainder of this year is expected to exceed the target range before declining in 2027, said the MPC.

The Thai economy is projected to expand by 2.3% and 1.8% this year and next respectively, with growth stronger than anticipated, thanks to increased exports and private investment.