The Bank of Thailand has opted to maintain the policy rate at 2.5% for the third consecutive meeting, resisting government calls for a reduction. The decision was announced on Wednesday, reflecting the bank’s confidence in the sustained growth of the Thai economy, which has outpaced the levels seen in 2023.
Piti Disyatat, the secretary of the Bank of Thailand’s Monetary Policy Committee (MPC), mentioned that the Thai GDP is expected to grow by 2.6% this year, aligning closely with its potential growth rate. He also highlighted projections of stronger GDP growth in the first quarter of this year compared to the fourth quarter of 2023, with a positive outlook for growth throughout the year.
The central bank anticipates further economic growth in 2025, with a projected expansion of 3%. The National Economic and Social Development Council reported a growth rate of 1.7% for the fourth quarter of 2023 and 1.9% for the full year.
Despite differing viewpoints within the MPC, the majority decision was to maintain the policy rate at 2.5%, taking into consideration both positive and negative economic factors. Stimulus measures introduced by the government, such as property incentives and a substantial budget for the digital wallet scheme, were factored into the bank’s GDP growth forecasts for the upcoming years.
The growth drivers for this year are expected to be tourism and private consumption, with the influx of foreign tourists aligning with projections. Government budget disbursements in late 2024 are anticipated to boost public expenditure and stimulate the economy into 2025.
While uncertainties remain regarding factors like export recovery, government spending, and global monetary policies, the MPC will closely monitor these developments to inform future monetary policy decisions.
The decision to maintain the policy rate was in line with market expectations, with the majority of analysts predicting this outcome. Analysts believe that the current rate is conducive to economic stability and supports monetary policy objectives.
Looking ahead, the Thai economy is poised for growth supported by various factors including tourism, domestic consumption, government stimulus measures, and infrastructure projects. Market experts foresee economic growth of 2.6% in 2024 and 3% in 2025, underpinned by positive trends and potential government interventions.
Therdsak Thaveeteeratham from Asia Plus Securities mentioned that it would be unexpected for the MPC to cut rates before the Federal Reserve, likely post-June. The Bank of Thailand’s decision to maintain the policy rate is aimed at managing baht fluctuations, despite a decline in inflation over recent months.
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