The Bank of Thailand (BoT) unanimously decided to keep its policy rate unchanged at 1.0% for the second consecutive meeting, aligning with market expectations. The central bank emphasized that its current policy stance remains accommodative to support economic recovery, noting that while growth has been stronger than anticipated, it is still considered low and uneven [1].
Commerzbank highlighted that the BoT is prioritizing growth risks over inflation, viewing the recent rise in inflation as transitory and primarily supply-driven. The BoT expects price pressures to ease once supply-side disruptions subside. However, Assistant Governor Don Nakornthab stated that if inflationary pressures extend beyond supply-side factors, the BoT would consider tightening policy [1].
In the foreign exchange market, the Thai Baht (THB) has come under pressure, with USD/THB rising for five consecutive sessions, up 0.9% to 33.43 as of yesterday. BoT officials attributed the Baht's weakness mainly to broad US Dollar (USD) strength and one-off equity outflows. Assistant Governor Nakornthab also stressed that the BoT is prepared to intervene to smooth excessive FX volatility if one-sided moves intensify [1].
Looking ahead, the BoT is likely to keep the policy rate unchanged for the remainder of the year, as its primary concern remains downside risks to growth rather than inflation, which is currently viewed as a less pressing issue [1].
CONCLUSION
The Bank of Thailand's decision to maintain its policy rate at 1.0% reflects a cautious approach, prioritizing economic growth over inflation concerns. The central bank remains vigilant regarding currency volatility and stands ready to intervene if necessary, while signaling that policy tightening would only occur if inflation risks broaden beyond current supply-side factors.