Thailand’s central bank left its key interest rate unchanged again on Wednesday in a bid to support a highly uncertain economic recovery.
The Monetary Policy Committee voted unanimously to hold the policy rate unchanged at 0.50 percent, the Bank of Thailand said in a statement. The decision was in line with economists’ expectations.
The previous change in the key rate was a quarter-point reduction in May last year amid the peak of the coronavirus pandemic.
Downside risks and uncertainties surrounding the economic outlook remained high in the period ahead and the economy would thus need support from the continued low policy rate, the Bank of Thailand said in a statement.
“The Committee therefore 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.
The central bank lowered its growth forecast for the Thai economy for this year and next to 3.0 and 4.7 percent, respectively, citing lower tourist figures and the impacts of the new wave of the Covid-19 outbreak. A fast recovery in exports is expected to underpin growth.
The bank expects headline inflation to return to the target in the middle of 2021.
Policymakers stand ready to use additional appropriate monetary policy tools if necessary, the bank added.
“With the economy set to remain in the doldrums both monetary and fiscal policy are going to have to remain loose for a long time to come,” Capital Economics economist Gareth Leather said.
“We expect the policy rate to remain at its current level throughout 2021 and 2022.”
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