％Effective Federal Funds Rate
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Monetary Policy Committee holds rate at 1.00%, wary of household debt dragging on Thai economy
MacroDigital Finance
The minutes of the Monetary Policy Committee meeting No. 4/2026 disclosed that the committee voted unanimously to keep the policy rate unchanged at 1.00% per annum, in order to preserve the capacity of monetary policy and support Thailand's still-uneven economic recovery. The economy is expected to expand close to the previous assessment, driven by the technology and artificial intelligence cycle that has boosted exports and private investment, which grew better than expected through investment in data centres and by leading technology companies. However, the committee noted that the benefits to the Thai economy remain limited, because exports are concentrated in AI-related goods that rely heavily on imports, investment in data centres creates lower value added and employment than past investment, and other export goods and small and medium-sized enterprises still face declining competitiveness. Private consumption has slowed amid high living costs, slow recovery in household income, and accumulated household debt problems, and is expected to slow again in the fourth quarter of 2026, while SME credit continues to contract in almost every business sector. Inflation is expected to rise temporarily on oil prices and the effects of El Nino on fresh food prices. The committee assessed that further rate cuts in a non-crisis situation may not be worth the cost, because keeping rates too low for too long could accumulate vulnerabilities from debt accumulation and inefficient resource allocation. The long-term solution therefore must rely on coordination with fiscal policy, targeted financial measures to help SMEs, and economic restructuring to raise productivity, while preserving policy space to cushion future geopolitical and global trade uncertainty.