Thailand’s central bank is seen at the Bank of Thailand in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva/File photo
BANGKOK —Thailand’s central bank left its key interest rate unchanged for a second straight meeting on Wednesday, as expected, resisting government pressure to reduce borrowing costs to help revive faltering growth.
The Bank of Thailand’s (BOT) monetary policy committee in a 5-2 vote decided to hold the one-day repurchase rate at 2.50 percent, the highest in more than a decade.
It had raised the rate by 200 basis points since August 2022 to curb inflation. Two members voted for a cut of 0.25 basis points.
All 27 economists in a Reuters poll had predicted the BOT would the rate steady on Wednesday, while saying the first rate cut was more likely to come earlier than they expected.
“The current policy interest rate is consistent with preserving macro-financial stability,” the BOT said in a statement.
READ: Thai PM says central bank rate hikes no good for economy
“Most members thus voted to maintain the policy rate at this meeting. Two members voted to cut the policy rate by 0.25 percentage point, to reflect a lower potential growth as a result of structural challenges.”
The central bank said it stood ready to adjust rates as appropriate.
It said the economy was growing slower than expected and would be supported by domestic demand, though structural impediments, particularly deteriorating competitiveness, would further hamper growth.
The baht was down slightly at 35.580 after the announcement.
The decision will be a disappointment for the government, coming a day after Prime Minister Srettha Thavisin called again for a rate cut to jumpstart Southeast Asia’s second-largest economy, which he has described as in crisis, a depiction the BOT chief has rejected.
Srettha, who is also the finance minister, has been at loggerheads with the central bank over the direction of monetary policy, arguing the economy needed support amid negative inflation.
READ: Thai economy in recession, needs a boost —deputy finance minister
BOT Governor Sethaput Suthiwartnarueput recently told Reuters that monetary policy was “broadly neutral” and while growth would be slower than expected this year, the economy was not in crisis.
On Wednesday, the BOT lowered its 2024 growth outlook to 2.5-3 percent from 3.2 percent. The economy expanded 2.6 percent in 2022.
Consumer prices have fallen for four consecutive months year-on-year through January, driven by government energy subsidies, below the central bank’s target range of 1 percent to 3 percent.
The central bank said it saw headline inflation near 1 percent this year and saw inflation picking up in 2025.