Thai central bank expected to hold rate at record low

Thailand’s central bank is expected to keep its key interest rate at a record low 0.50% on Wednesday, as the Southeast Asian country struggles with its biggest COVID-19 outbreak to date, a Reuters poll showed on Monday.

The Bank of Thailand (BOT) said last month the key rate was likely to stay low for a while amid a slow economic recovery.

With the BOT’s limited policy ammunition, all 18 economists surveyed expect the Monetary Policy Committee (MPC) to hold its one-day repurchase rate at 0.50% this week, with several seeing no policy change throughout 2022.

The BOT has kept the policy rate unchanged after three cuts in the first half of 2020, easing the effects of the pandemic.

It has since focused on targeted financial measures along with fiscal policy it has said must play a key role in supporting growth.

“The MPC would keep a hold on its policy rate but will have to resort to other measures to facilitate the transmission of their accommodative monetary policy,” said Kobsidthi Silpachai, head of capital markets research of Kasikornbank.

In June, the BOT cut its 2021 economic growth forecast to 1.8 per cent from 3.0 per cent due to the outbreak, and last week it said stricter containment measures imposed last month were expected to cut gross domestic product by as much as 2 per cent.