In a recent decision, the Bank of Thailand’s Monetary Policy Committee (MPC) voted six to one to maintain the policy rate at 2.50%, marking the fourth consecutive time it has held this rate steady. This decision comes despite ongoing calls from the government to reduce the rate by 0.25% to provide relief to borrowers.
One member of the MPC did support a 0.25% cut in the one-day repurchase rate. However, the majority view, as outlined in the committee’s statement, is that the current rate aligns well with the prevailing economic conditions and supports macro-financial stability.
The Thai economy is anticipated to grow by 2.6% this year and 3.0% in the following year. The forecast for this year’s growth is bolstered by stronger-than-expected domestic demand in the first quarter, a continued recovery in tourism, and an accelerated fiscal budget disbursement in the second quarter.
Despite these positive indicators, exports are expected to grow at a modest pace due to structural challenges, including a decline in competitiveness. The automotive sector, in particular, is experiencing a slowdown in foreign demand, contributing to uncertainties in export and production recoveries. Nonetheless, overall financial conditions are reported to be stable.
The MPC also highlighted concerns over the high level of household debt. The committee emphasized that credit growth should align with ongoing efforts to reduce debt to ensure long-term financial stability.
In attendance at the MPC meeting were key officials, underscoring the importance of the discussions and decisions made regarding Thailand’s monetary policy direction.
