The Monetary Policy Committee (MPC) has voted 6 to 1 to maintain the policy interest rate at 2.50% per annum. One member suggested a 0.25% reduction to alleviate debtor burdens. The Bank of Thailand forecasts the economy to grow by 2.6% this year and 3.0% next year.
Piti Disyatat, MPC Secretary, stated that the decision to maintain the interest rate is due to strong domestic demand and tourism. The country is expecting 35.5 million foreign tourists this year and 39.5 million next year. However, exports in textiles and chemical products remain low, while the electronics sector shows improvement.
Inflation is expected to gradually rise and return to target by Q4 2024. General inflation is projected at 0.6% this year and 1.3% next year. Core inflation is expected at 0.5% in 2024 and 0.9% in 2025.
Overall financial conditions are stable, with the baht weakening in line with U.S. monetary policy. Private borrowing costs remain similar, with business loans growing but household loans slowing down.
The MPC is concerned about high household debt. They support the Bank of Thailand’s policy for financial institutions to lend based on borrowers’ repayment capabilities. The MPC also supports restructuring debt to assist troubled debtors and loan guarantee measures to increase SME access to credit.
The MPC will continue to adjust monetary policy based on economic and inflation trends, closely monitoring economic recovery and government measures.
