Bank of Thailand holds key interest rate at 1.00%

The Bank of Thailand’s Monetary Policy Committee voted unanimously on Wednesday, Apr 29, to keep the one-day repurchase rate at 1.00%, leaving the benchmark at its lowest level in more than three years. The decision, closely watched in Phuket and nationwide, followed a February cut and matched all 28 forecasts in a Reuters poll.

Six rate cuts between October 2024 and February had already lowered the key rate by 150 basis points as policymakers tried to support Southeast Asia’s second-largest economy. Authorities have been confronting weak consumption and high household debt.

Growth outlook weighed by war and weak purchasing power

The MPC said the Middle East war is expected to slow economic growth to 1.5% this year, before improving to 2.0% in 2027. It added that this year’s unchanged growth forecast does not include the government’s stimulus package.

The committee said the slowdown is raising business costs and weakening household purchasing power. It also warned that credit is likely to remain low, with the effects of the war on credit quality and growth still requiring close monitoring.

Inflation seen rising in 2026 before easing in 2027

Headline inflation is projected to average 2.9% in 2026, after standing at -0.5% in the first quarter, with higher global energy prices cited as the main driver. The MPC said inflation should decline in 2027 as supply-side pressures gradually ease.

The committee said price increases are not expected to be broad or sustained because businesses have limited ability to pass on costs under weak demand. It also noted that interest rates across the financial system have fallen after recent policy cuts, but lending remains subdued as financial institutions stay cautious over high-risk borrowers and continue assessing the impact of the war.

Source: https://www.thephuketnews.com/bank-of-thailand-keeps-interest-rate-unchanged-100087.php