Thai central bank holds key rate at 2.5%, cuts growth outlook

BANGKOK  – Thailand’s central bank left its key interest rate unchanged on Wednesday, as expected, ending a year-long tightening cycle amid a slowing economy and below-target inflation, while lowering its growth outlook.

The central bank said the current rate of 2.5 percent was suitable to support expansion of Southeast Asia’s second-largest economy, which grew at its weakest pace this year in the third quarter.

The Bank of Thailand’s (BOT) monetary policy committee voted unanimously to hold the one-day repurchase rate at 2.5 percent, the highest in a decade. It had hiked the rate by 200 basis points since August last year to curb inflation.

READ: Thai inflation falls for first time in 25 months

All 28 economists in a Reuters poll had predicted the BOT would hold the rate on Wednesday, with median forecasts showing no policy change until at least July 2025.

The BOT reduced its 2023 economic growth forecast 2.4 percent from 2.8 percent seen earlier, and cut its 2024 growth outlook to 3.2 percent from 4.4 percent. The economy expanded 2.6 percent last year.

READ: Thailand to inject $15.2B into economy through digital wallet plan – PM

The adjusted 2024 forecast did not factor in the impact of the government’s controversial 500 billion baht ($14.3 billion) digital handout policy to be implemented next year. It said it saw growth of 3.8 percent next year if factoring in the signature policy.

The economy grew much less than expected at 1.5 percent in the July-September quarter from a year earlier on weak exports and government spending.

READ: Thai economy in ‘crisis’ and needs major stimulus – PM

Last week, Prime Minister Srettha Thavisin said the economy was in “crisis”, stressing the need to forge ahead with the handout policy. ($1 = 34.94 baht)