BANGALORE, Oct 11 (Askume) – The Bank of Thailand (BoT) will keep its key interest rate unchanged at 2.50% next week and for the rest of the year, a Askume poll showed, with economists saying an expected cut has been brought forward by four points for the first time.
Inflation rose to 0.61% in September from 0.35% in August, but is still below the central bank’s target range of 1-3%. However, the median forecast in the survey suggests inflation will return to a range this quarter.
Southeast Asia’s second-largest economy’s growth is slower than regional competitors due to high household debt but rising tourist arrivals and government supportThis situation is expected to improve with increased public spending supported by the digital wallet initiative .
In an October 7-10 survey, 24 of 28 economists predicted the Bank of England would keep the benchmark overnight repurchase rate (THCBIR=ECI) unchanged at 2.50% on October 16.
All four had called for a 25 basis point rate cut, which the government hopes will help revive the sluggish economy.
Market strategist Poon Panichpibool said, “Since the central bank ‘relies on perspective and takes into account short-term noise,’ the central bank is likely to maintain the current monetary policy stance as long as there are no significant downside risks to the economic outlook.” The Bank of Thailand may deem it appropriate.
“Additionally, unless there are clear downside risks from domestic economic weakness, the central bank may decide to use more direct measures to alleviate household debt problems.”
The central bank reiterated in its last meeting that the current policy rates are in line with the potential of the economy.
Of economists with year-end forecasts, nearly 60%, or 15 of 26, said interest rates would remain steady. The rest expect a drop of 25 basis points or more.
The median forecast showed the first quarter-point rate cut would come in the next quarter, a change from the August survey, which predicted the first rate cut would come in the second quarter.
The baht hit a 31-month high on 30 September , posing challenges for exporters and tourism spending, and household debt also reached a record high, clouding the outlook.
The two met last week to express their concerns after nearly a year of wrangling between the government and the BOT over funding . They will meet again this month to discuss the inflation target.
“Ministers and governors meet regularly. Therefore, this meeting should not have any impact on the monetary policy committee’s decision,” said Nond Pruiksiri, senior economist at Siam Commercial Bank.
“The Bank of Thailand will have to recalibrate its policy thinking as it is becoming clearer that the potential growth rate of the Thai economy will be much lower than previously thought.”
The survey shows Thailand’s average economic growth rate is 2.5% this year and 2.9% in 2025, compared with 2.6% and 3.2% expected in July.
(Additional reporting from October Askume Global Economic Survey)
