The Monetary Policy Committee (MPC) voted unanimously on Wednesday (Apr 29) to maintain the one-day repurchase rate at 1.00%, the lowest level in more than three years. It had cut the rate at its previous meeting in February, reports the Bangkok Post.
All 28 economists in a Reuters poll expected steady policy at this week’s meeting. A strong majority, 24 of 28, expected the policy rate to remain on hold throughout 2026, while four tipped a 25 basis-point cut by year-end, said the report.
Six cuts between October 2024 and February had reduced the key rate by a total of 150 basis points as authorities sought to spark Southeast Asia’s second-largest economy, which has been grappling with weak consumption and high household debt.
The impact of the Middle East war is projected to slow economic growth this year to 1.5%, with a forecast improvement to 2.0% in 2027, the MPC said in a statement after its meeting. The unchanged growth projection for this year has not included the government’s stimulus package.
The slowdown is directly impacting businesses by increasing costs and undermining household purchasing power, it said.
Inflation is expected to rise in 2026 but is projected to decline in 2027 as supply-side pressures are expected to gradually ease. Credit is likely to remain at a low level, with the impact of the war on credit quality and growth needing to be monitored.
Headline inflation is projected to average 2.9% in 2026, up from -0.5% in the first quarter, driven primarily by rising global energy prices.
“However, price increases will not be broad or sustained due to limited cost pass-through by businesses under weak demand,” the MPC said.
Interest rates in the financial system have decreased following recent policy interest rate cuts, but lending remains weak as financial institutions are cautious about high-risk borrowers and are still assessing the impact of the war.