The Bank of Thailand opted to maintain its primary interest rate on Wednesday, following a rate cut in the previous session. This decision was made because policymakers evaluated that the prevailing rate aligns well with current macroeconomic conditions.
In a unanimous move, the Monetary Policy Committee decided to keep the policy rate at 2.25 percent, a decision anticipated by many economists. The last adjustment was a quarter-point reduction in October.
"The Committee determined that maintaining the policy rate would support the economic trajectory nearing potential, ensure inflation moves toward the desired range, uphold long-term macro-financial stability, and preserve policy flexibility amid rising uncertainties," stated the central bank.
The Bank of Thailand (BoT) held steady its economic growth forecasts for Thailand, predicting 2.7 percent this year and 2.9 percent next year.
S&P Global reported a rise in Thailand's Manufacturing PMI to 50.2 in November.
The bank anticipates that tourism and domestic demand will continue to fuel growth, augmented by exports of electronics and machinery alongside the anticipated recovery of the global technology cycle.
Despite this, the bank voiced concerns about the uneven nature of the economic recovery across sectors. It highlighted the slow recovery of small and medium enterprises and the competitive strains faced by some manufacturing sectors.
The inflation forecasts for this year and next were slightly reduced to 0.4 percent and 1.1 percent, respectively, from 0.5 percent and 1.2 percent as estimated in October. The bank anticipates low energy inflation due to stable global oil prices.
In contrast, core inflation projections for this year and the next were updated to 0.6 percent and 1.0 percent, compared to the previous estimates of 0.5 percent and 0.9 percent. This adjustment reflects the economic outlook and the cost pass-through for food items. "In the medium term, inflation expectations remain aligned with the target," reiterated the bank.
Gareth Leather, an economist at Capital Economics, characterized the latest decision by the BoT as "a pause rather than an end to the easing cycle."
"With inflation expected to remain low and growth likely to face challenges, we anticipate a cumulative reduction of 75 basis points next year," Leather remarked.
