Bangkok: As anticipated, the Monetary Policy Committee (MPC) has voted unanimously to maintain Thailand's interest rate at 1%.
According to Thai News Agency, the MPC meeting on June 24th saw all seven members present for the first time in a year, resulting in a 7-0 vote to keep the policy interest rate unchanged. The decision comes as the Thai economy shows signs of growth, albeit at a low and uneven rate, with inflation expected to rise due to supply-side factors before gradually declining.
The Thai economy's growth forecast for 2026 has been adjusted upward to 2.3%, driven by factors such as exports, investment, government measures to counter the energy crisis, and an improving situation in the Middle East. Despite this positive momentum, overall economic growth remains low, with SMEs facing challenges and households pressured by rising living costs. The MPC emphasizes the need for government measures to boost economic growth in 2027, which is projected to slow.
Inflation for 2026 is projected to peak at 4.5% in October before declining to an average of 1.4% in 2027 as supply-side factors ease. Medium-term inflation forecasts remain stable, but the MPC will continue to monitor price transmissions and inflation expectations. The Thai baht has weakened against the US dollar, influenced by US monetary policy, while financial institutions remain cautious in lending to high-risk borrowers.
Mr. Don Nakornthap, Secretary of the MPC, highlighted that the current interest rate supports economic recovery, even as international interest rates rise. The Bank of Thailand views the 5.7% depreciation of the baht as beneficial for exports and the agricultural sector, noting that capital flows are stable. The current account balance is assessed to be in balance for the year, with improvements following a decline in global oil prices.
The MPC's decision highlights its focus on sustaining economic recovery, price stability, and financial system stability, while carefully monitoring inflation and interest rate developments internationally.