Thailand’s central bank kept its key interest rate unchanged at a record low, as widely expected, on Wednesday.
The Monetary Policy Committee of Bank of Thailand unanimously decided to retain the interest rate at 0.50 percent. The bank had reduced the rate by 25 basis points in May 2020.
The Committee voted to maintain the policy rate at this meeting to preserve the limited policy space to act at the appropriate and most effective timing, the bank said in a statement.
The bank reiterated that it stands ready to use additional appropriate monetary policy tools if necessary.
Policymakers observed that the economy would expand at a much lower rate due to the third wave of the outbreak which affected domestic spending.
Moreover, the recovery in tourism would be affected by the longer-than-expected delay in the re-opening of the country. The main driving force of the economy would be merchandise exports.
The bank expects headline inflation to increase temporarily in the second quarter of 2021 due to the low level of crude oil prices in the same quarter of last year. Medium-term inflation expectations remained anchored within the target, the bank said.
With the economy likely to remain weak for some time to come, monetary and fiscal policy will need to remain supportive for the foreseeable future, Gareth Leather, an economist at Capital Economics, said.
The policy rate will remain at around 0.5 percent until at least the end of 2023, the economist added.
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