Bank of Thailand (BOT) on Wednesday left benchmark interest rates at a record low, saying it was trying to underpin a fragile economic recovery from the coronavirus pandemic. The central bank has kept rates at 0.50% for a fourth straight meeting. According to the BOT’s Monetary Policy Committee (MPC), policymakers would continue monitoring various risks, including domestic political uncertainty.
So far in 2020, the BOT has already lowered the benchmark rate by 75 bps. It also provided debt relief programmes and soft loans. The government also plans to raise 1 trillion baht ($33 billion) in borrowing to fight the COVID-19 fallout. Analysts expected the BOT to lower rates in the first quarter of 2021 to provide a cushion against potential shocks.
Baht hit its 10-month high on Monday but then lost 0.53% to 30.3 per US dollar on Wednesday. Assistant Governor Titanun Mallikamas said the central bank would hold a meeting on Friday to discuss necessary measures on baht’s recent appreciation which could threaten the recovery.
Thailand’s economy shrank 6.4% in the third quarter, beating economists estimates of an 8.6% contraction and recovering from a 12.1% slump in the second quarter. Easing coronavirus restrictions have contributed to the improvement in private investment and domestic demand. However, the tourism-reliant economy has been dragged by a stronger baht and a ban on foreign tourists which remained in place. Meanwhile, consumption weakened due to escalating political protests.
