Thailand leaves rate unchanged for 2nd time

Bank of Thailand held its benchmark interest rate unchanged for the second consecutive meeting, defying government pressure to lower borrowing costs to boost the country’s economy, Bloomberg reported on Wednesday.

The Monetary Policy Committee voted 5-2 on Wednesday to keep the one-day repurchase rate at a decade-high 2.50 per cent, as every one of the 24 economists Bloomberg surveyed predicted.

Thailand’s inflation-adjusted real interest rate has increased to 3.61 per cent, among the highest in Southeast Asia, despite the BOT’s tightening cycle only producing 200 basis points of increases since 2022.

This increase coincides with falling consumer prices. Prime Minister Srettha Thavisin has responded to this by calling for rate reductions to boost economic growth, which is predicted to have slowed to 1.8 per cent annually last year.

The move is expected to deepen the dispute between the administration and monetary policy experts, who have insisted that rate reductions aren’t the solution to underlying economic issues. The majority of economists predict that the central bank won’t give in to political pressure just yet and that, depending on additional evidence of a worsening economic outlook, a rate cut, if any, may occur around the second quarter.