Central Bank Holds Rate at 1% for Third Straight Meeting
The Bank of Thailand's Monetary Policy Committee voted unanimously on August 26 to keep its benchmark interest rate at 1.00%, the third consecutive meeting without a change. MPC secretary Don Nakornthab said the committee judged the current level appropriate to support the recovery while retaining an accommodative stance, backed by targeted measures for vulnerable borrowers and potentially viable small businesses.
"The Committee believes that the accommodative monetary policy, coupled with targeted monetary measures, is contributing to economic recovery," the committee said, adding that it deemed the current rate suitable even as inflation is projected to rise temporarily on supply-side pressures through early 2027. The decision matched the forecasts of all 23 economists surveyed ahead of the meeting.
Technology Investment Surges While SMEs and Households Fall Behind
The committee flagged a widening divide in the economy. Technology and AI-linked private investment continues to outperform, driven by stronger goods exports, but these projects rely heavily on imported machinery and equipment, limiting their benefit to local supply chains, jobs and wages. Meanwhile, SME credit contracted even as total system-wide lending expanded, with large corporations absorbing most new loans for investment and working capital, leaving smaller businesses squeezed by tighter financing and weak domestic demand.
Households, meanwhile, are spending more cautiously as living costs rise, weakening demand for consumer-facing businesses outside the leading tech sector. The committee lowered its inflation forecasts for 2026 and 2027 on softer global energy prices, while flagging the Middle East conflict, trade protectionism and Federal Reserve policy uncertainty as key risks to watch. Banks have been encouraged to widen targeted support for vulnerable households and SMEs judged capable of remaining viable.
