The Bank of Thailand’s Monetary Policy Committee (MPC) unanimously voted to maintain the policy interest rate at 1.0% on April 29, 2026, aiming to support an economy facing moderated growth and heightened uncertainty.
Key Points
- Economic Growth: GDP growth projections have been lowered to 1.5% for 2026 and 2.0% for 2027, as rising energy costs and travel constraints negatively impact domestic consumption and tourism.
- Inflation Outlook: Headline inflation is expected to average 2.9% in 2026—driven by global energy prices—before easing to 1.5% in 2027 as supply-side pressures eventually subside.
- Export Performance: Merchandise exports are forecasted to maintain favorable growth, bolstered by sustained global demand for technology products.
- Financial Market Volatility: Increased volatility has been observed in the baht and government bond yields, with the committee noting that financial institutions remain cautious regarding credit growth and loan quality due to the geopolitical climate.
- Risk Monitoring: The MPC identified significant downside risks, including potential supply chain disruptions and prolonged high energy prices, particularly concerning the potential closure of the Strait of Hormuz.
- Policy Flexibility: While the current rate is deemed appropriate, the committee remains prepared to monitor the economic impact of the war and adjust its stance if inflation expectations shift or if further fiscal stimulus is introduced by the government.
The committee concluded that current policy remains appropriate as the nation contends with supply-side inflationary pressures, increased business costs, and weakened household purchasing power stemming from the conflict in the Middle East.
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