# Thailand’s central bank keeps interest rate at 2.50 percent

- Link: https://www.thailand-business-news.com/banking/157698-thailands-central-bank-keeps-interest-rate-at-2-50-percent
- Published: 2024-08-21T21:31:26+07:00
- Author: Boris Sullivan

The Bank of Thailand’s Monetary Policy Committee has decided to keep the policy 
rate steady at 2.50 percent, citing the nation’s positive economic recovery.

 * The Bank of Thailand has decided to maintain the policy rate at 2.50 per cent,
   indicating confidence in the nation’s economic recovery driven by surging tourism
   and domestic demand.
 * The Monetary Policy Committee expects the inflation rate to return to the targeted
   frame late this year, and sees the current policy rate as conducive to improving
   economic growth potential.
 * Thailand’s gross domestic product (GDP) expanded by 2.3 per cent in the second
   quarter of 2024, attributed to increases in private consumption, government spending,
   and exports.

The committee expects economic expansion driven by increased tourism and domestic
demand, but notes that export recovery remains slow. It also anticipates inflation
to return to target levels later in the year.

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The Monetary Policy Committee (MPC) of the Bank of Thailand voted to maintain the
policy rate at 2.50 percent in its April 10, 2024 meeting. While two members favored
a 0.25 percentage point cut, the majority believed the current rate supports macroeconomic
stability and that monetary policy has limited impact on structural issues hindering
the Thai economy.

The Thai economy is projected to grow at a faster rate in 2024 than the previous
year, driven by private consumption, tourism, and accelerated public expenditure.
However, export recovery remains sluggish. Inflation is expected to gradually rise
towards the target range by year-end, supported by supply factors and government
subsidies.

The MPC remains concerned about elevated household debt and the need for debt deleveraging
to mitigate long-term vulnerabilities. The MPC acknowledged the effectiveness of
monetary policy in resolving financial access issues is limited, welcoming the Bank
of Thailand’s efforts to accelerate targeted measures, particularly responsible 
lending initiatives.

The Thai economy faces several uncertainties, including the pace of export recovery,
government budget disbursement, and fiscal stimulus measures. The Committee will
continue to monitor these developments and adjust monetary policy accordingly.

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While inflation is projected to gradually increase towards the target range by the
end of 2024, concerns persist regarding elevated household debt, financial access
issues, and uncertainties in the foreign exchange market. The baht’s volatility 
relative to the US dollar and other regional currencies is being closely monitored.
The Committee will continue to consider growth and inflation outlooks in its future
monetary policy decisions.

The committee is closely monitoring the impact of declining credit quality on borrowing
costs and overall credit growth, while also recognizing the challenges faced by 
small and medium enterprises in accessing credit. Additionally, the National Economic
and Social Development Council reported a 2.3 percent GDP growth in the second quarter
of 2024, with private consumption, government spending, and exports contributing
to the positive growth.