The Bank of Thailand is expected to keep its policy interest rate unchanged at 1.00%, as economic growth this year is projected at between 1.3% and 1.7%, Governor Vitai Ratanakorn said on Thursday.
He noted that the current rate remains appropriate while the central bank monitors inflation risks linked to the Middle East conflict. Authorities are assessing the situation based on its duration, intensity and impact on global supply chains.
Under the base-case scenario, the conflict is expected to end in the first half of the year, with Thailand’s GDP growth forecast at 1.3% to 1.7% for 2026. A quicker resolution before June could support growth closer to 1.7%, while a prolonged situation may keep it nearer 1.3%. These projections exclude any upcoming government stimulus measures.
Inflation will also play a key role in future rate decisions. The central bank expects inflation to range between 2.5% and 3.5%, broadly within its target band of 1% to 3%. However, if inflation remains elevated for longer than expected, a rate hike could be considered.
For now, the governor said there is no need to raise rates, as doing so could weaken consumer demand without delivering meaningful economic benefits.
The central bank’s outlook does not yet include government measures expected to be announced soon, such as loan guarantees to support the Oil Fuel Fund and other initiatives to offset rising energy costs.
Additional support is also being planned, including targeted soft loans for businesses, particularly in areas like solar rooftop installations and electric vehicle financing. Relaxed housing loan rules will also be extended for another year to support the property sector.
The Bank of Thailand previously surprised markets by cutting its key rate in February to support the sluggish economy, with the next policy meeting scheduled for April 29.
Meanwhile, inflation trends remain mixed. Headline CPI fell by 0.08% year-on-year in March, following a 0.88% drop in February, marking 12 consecutive months of declines. Overall, CPI dropped 0.54% in the first quarter.
However, the Commerce Ministry expects inflation to rise in the second quarter. If oil prices remain elevated for two months, inflation could average 3.7%, and may reach as high as 5.8% if high prices persist for three months.