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Thailand’s MPC Keeps Interest Rate Unchanged at 0.5%

The Monetary Policy Committee (MPC) decided at its meeting No. 1/2022 today (February 9) to leave the policy rate at 0.5%.

The MPC estimates that the Thai economy should recover from the COVID-19 pandemic. However, it remains under pressure from headline inflation, which will tend to accelerate in the first half of this year due to higher prices for energy and some fresh food.

Whereas demand-side inflationary pressures remained low, reflecting the recent recovery in incomes and purchasing power.

The Monetary Policy Committee, therefore, decided to maintain the key interest rate, as the continued accommodative monetary policy will support economic growth. Together with fiscal and tax measures focused on restoring and expanding economic potential. This will play an important role in supporting the labor market. In addition, corporate and household incomes have recovered strongly.

The Board of Directors also continues to believe that the Thai economy should recover further this year. This is due to higher exports and an increase in the number of foreign tourists as a result of the faster than expected relaxation of travel restrictions.

However, the economic recovery remains fragile and varies from sector to sector, especially in the tourism sector, which is still at a much lower level than before the outbreak of the pandemic.

Nevertheless, the MPC remains of the view that developments in the labor market and the impact of the rising cost of living need to be monitored in a situation where incomes have not yet fully recovered at present.

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