Thai Central Bank Leaves Key Rate at Record Low but Flags Economic Risks

Thai
FILE PHOTO: The Bank of Thailand logo is seen in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva

BANGKOK — Thailand’s central bank left its key interest rate unchanged at a record low on Wednesday, preserving its limited policy ammunition, but warned of risks as the country deals with a fresh wave of coronavirus infections.

Southeast Asia’s second-largest economy continues to recover but risks remain high and it could grow less than the previously forecast 3.2% this year, monetary policy committee secretary Titanun Mallikamas told a news conference.

The Bank of Thailand’s committee members voted unanimously to keep the one-day repurchase rate unchanged at a record low of 0.50% for a sixth straight meeting, after three cuts in the first half of 2020.

The economy still needs support from low interest rates and monetary policy will remain accommodative, he said.

The BOT said in a statement the impact of the recent outbreak on the Thai economy would be less severe than last year due to less strict containment measures, but it expects the economy to expand at a slower pace than previously forecast. 

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Support from the targeted government measures together with the export recovery will, however, support economic growth, it added.

Twelve economists surveyed by Reuters had expected the BOT to remain on hold, with two analysts predicting a 25 basis-point cut, citing the impact from new COVID-19 infections.

The rate was last cut in May 2020, when the tourism-reliant economy was first hit by the pandemic.

Thailand had largely contained the coronavirus by mid-2020 but the new cases detected in December have led to infections across the country. Economists worry the latest outbreak will hurt the country’s fledgling recovery as tourism flounders.

In December, the BOT reduced its 2021 GDP growth outlook to 3.2% from 3.6% due to the slump in tourism. It later said the forecast could be cut again due to the outbreak.

Last week, the finance ministry slashed its growth outlook to 2.8% this year from 4.5%..

Reporting by Orathai Sriring, Kitiphong Thaichareon, Satawasin Staporncharnchai; Editing by Jacqueline Wong; Reuters

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