Bank of Thailand is expected to hold the benchmark interest rate unchanged at a record low this week amid limited policy room, according to economists polled by Reuters. BOT policymakers are also expected to assess the effect of the current stimulus package before deciding to make any adjustment in the rate. The central bank’s Monetary Policy Committee (MPC) is expected to leave its one-day repurchase rate at 0.50%, repeating the result of the two previous meetings.
Thailand suffered its deepest contraction in over 20 years in the April-June quarter as the COVID-19 pandemic hurt tourism and domestic activity. However, public spending and easing coronavirus restrictions have helped the economy to improve gradually since June. Current MPC member Sethaput Suthiwart-Narueput will assume the BOT Governor position in October and is expected to stick to his predecessor’s approach to only cut rates in a further economic downturn.
In 2020, the central bank has cut rates by 75 bps and delivered targeted measures to cushion the coronavirus shock through soft loans and debt relief programmes. The government also planned a THB1 trillion ($32 billion) pandemic stimulus. Economists said BOT could lower its economic projection as travel bans continued to weigh on the country’s tourism sector. Outgoing BOT Governor Veerathai Santiprabhob called the current forecast of an 8.1% contraction “optimistic.”
