Thailand keeps rates at 1% as recovery stays uneven

Thailand's central bank left its benchmark interest rate unchanged at 1.00% on Wednesday, a decision that was unanimous and in line with market expectations. The Bank of Thailand (BOT) said current policy settings remain appropriate to support an economic recovery that is proceeding at a modest and uneven pace.

The committee noted that exports and private investment have grown faster than anticipated, helped by strong global demand for artificial intelligence-related goods. However, overall growth remains subdued, with the economy expanding just 1.9% year-on-year in the second quarter, a sharp slowdown from the 2.8% recorded in the previous three months.

The BOT maintained its broad growth outlook for 2026 and 2027, while revising its inflation projections lower. Headline inflation, which slowed to 1.95% in July and sits within the central bank's 1% to 3% target range, is expected to ease further due to softer global energy prices. The bank cautioned that inflation could rise temporarily in early 2027 due to El Niño effects before easing again.

The rate has been held steady since February, following a series of six cuts totaling 150 basis points that began in October 2024. While some regional central banks have moved to raise rates in response to energy price pressures, Thailand has opted to keep policy accommodative.

The next policy review is scheduled for October 28, when the BOT will also release updated economic forecasts. Analysts expect the committee to maintain the current rate for an extended period, citing the improving inflation outlook.