Bank of Thailand Holds Rate at 1% Unanimously, Says Cut Not Worth the Risk

Macro

โดย Prachachat·

Summary · why it matters

The Monetary Policy Committee (MPC) voted unanimously to hold the policy interest rate at 1% per annum. The MPC secretary stated that cutting rates under current economic conditions might not be worth the cost, while raising rates in a fragile economy would also be inappropriate, amid risks from trade wars and inflation. Meanwhile, Krungthai COMPASS expects the MPC to keep rates at 1% throughout the year, citing risks of accelerating core inflation and the twin deficit problem. The Kasikorn Research Center views that the MPC is likely to hold rates at 1% through 2026 to support economic recovery. SCB EIC expects the MPC to hold rates until 2027, as the economy may grow only 2.1% next year. The Bank of Thailand governor denied that the MPC is committed to keeping rates unchanged for an extended period, saying the next decision could be either a hike or a cut, depending on data and economic outlook. Meanwhile, analysts from CIMB Thai pointed out that Thailand's economic risks are very high, and if inflation declines further, the MPC could resume rate cuts next year.

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