BANGKOK, May 5 — The Bank of Thailand (BoT) has maintained its policy rate at a record low of 0.5 per cent to preserve the limited policy space, as the kingdom fights the third wave of Covid-19 outbreak.
The BoT’s Monetary Policy Committee (MPC) today unanimously voted to maintain the benchmark interest rate for the eighth straight meeting.
In a statement, MPC secretary Titanun Mallikamas said the Thai economy would expand at a much lower rate due to the third wave of Covid-19 outbreak which affected domestic spending and the recovery of foreign tourist figures.
He said the latest Covid-19 outbreak has affected domestic spending and the reopening of the country to foreign tourists.
However, he said the merchandise exports which improved in line with the expansion of its trading partners’ economies has lent some support to the economy.
“The committee thus voted to maintain the policy rate at this meeting to preserve the limited policy space to act at the appropriate and most effective timing,” he said.
In a note today, RHB Research Institute Sdn Bhd expected the BoT to keep its policy interest rate unchanged at a record low of 0.5 per cent for the rest of 2021 despite the rising inflation as economic recovery remains highly uncertain.
Thailand is dealing with the third wave of Covid-19 infections which started in early April. To-date, the kingdom recorded 74,900 cases and 318 fatalities.
The BoT viewed that procurement and distribution of vaccines in an adequate and timely manner was the most important issue for the Thai economy at present.
It said the Thai economy could grow 2.0 per cent this year with a projected 1.2 million foreign tourists if the country can distribute 100 million doses of vaccine this year. Thailand has a population of more than 66 million people.
The BoT has forecast a Gross Domestic Product growth of 3.0 per cent this year.
However, the central bank added that if vaccine distribution is less than 64.6 million doses this year, the economy may only grow by 1.0 per cent and only 800,000 visitors to the kingdom this year, compared to nearly 40 million arrivals in 2019.
“The projection does not include potential additional government measures,” it said.