Thailand’s key policy rate to stay at 0.50 per cent
The Monetary Policy Committee (MPC) has decided to keep the policy interest rate at 0.50 per cent per year.
MPC secretary Piti Disyatat said on Wednesday after the meeting that four members voted to maintain the policy rate at 0.50 per cent while three members voted to raise the policy rate by 25 basis points.
The committee speculated that the Thai economy could grow continuously and has a chance to recover better than expected because domestic demand and foreign tourist arrivals were picking up.
The committee forecast that headline inflation was likely to increase and stay at a high level longer than previously expected due to the increasing oil price and higher costs being passed on. The MPC deemed that a very accommodative monetary policy would be less needed going forward.
However, to ensure that the economy would be able to recover as expected, a majority of members voted to maintain the policy rate in this meeting and would monitor the development of economic recovery and inflation risks closely.
Meanwhile, three members viewed the information on economic recovery and inflation risk as already clear enough to raise the policy interest rate in this meeting.
The committee also speculated that the Thai economy would grow by 3.3 per cent in 2022 and 4.2 per cent in 2023 as domestic consumption has recovered better than expected, especially in the services sector.
Moreover, the number of foreign tourists is expected to increase continuously due to the relaxation of border controls in Thailand and other countries.
Moreover, the labour market and household incomes showed signs of improvement after the easing of prevention measures and the economic recovery.
Meanwhile, the impact of the Covid-19 situation and the Ukraine-Russia conflict on the Thai economy will be limited.
However, the committee said it would continue to monitor risk factors for economic recovery in the later phase, especially the impact of higher prices on the cost of living for households.
