Central Bank Holds Firm on Interest Rates Despite Economic Strain

The Bank of Thailand has decided to maintain its current interest rate at 2.50% per annum despite calls for an emergency meeting to address the nation’s economic challenges.

Key Takeaways

• The Bank of Thailand is maintaining its interest rate at 2.50% per annum despite calls for an emergency meeting, citing that lowering the rate would not directly address the underlying causes of slow GDP growth and negative inflation.
• The decision to keep the interest rate steady comes in the face of political pressure and a challenging economic situation, with the central bank emphasizing the importance of targeted measures over broad financial support to address issues such as stagnant incomes and high household debt.
• Despite differing perspectives on monetary policy, the relationship between the Bank of Thailand and the government is described as professional and cordial, with the central bank prioritizing sustainable economic practices and efforts to manage the high household debt level.

The Office of the National Economic and Social Development Council (NESDC) has recently announced that Thailand’s economy expanded by 1.9% in 2023. While this growth is positive, it was slower than expected due to various factors .

BOT Governor Sethaput Suthiwartnarueput explained that lowering the interest rate would not directly address the primary causes of slow GDP growth and negative headline inflation. These causes include reduced spending by Chinese tourists, decreased petrochemical imports by Chinese firms, and delayed government budget disbursement.

The central bank emphasized the importance of targeted measures over broad financial support and highlighted the need to manage high household debt levels.