The Bank of Thailand’s the Monetary Policy Committee (MPC) on Wednesday voted 4 to 3 to maintain the policy rate at 0.50 percent at its meeting on Wednesday, according to Piti Disyatat, MPC Secretary.
Three members voted to raise the policy rate by 0.25 percentage point.
The Committee assesses that the Thai economy will continue to recover and could expand faster than previously expected owing to stronger domestic demand and the pickup in foreign tourists.
Headline inflation would increase and remain elevated above the upper bound of the target range for longer than previously estimated, due to the increase in oil prices and higher cost passthrough. The Committee deems that a very accommodative monetary policy will be less needed going forward.
However, to ensure that the recovery will continue to gain traction as anticipated, most members voted to maintain the policy rate in this meeting and will reassess the risks to growth and inflation going forward.
The Committee assesses that the Thai economy will expand at 3.3 percent in 2022 and 4.2 percent in 2023 on the back of better-than-expected recovery in domestic consumption, especially in the services sector.
Foreign tourist arrivals also improve following the faster relaxation of border controls in Thailand and other countries.
Furthermore, the labor market and household income show signs of improvement as economic activities continue to expand in tandem with the relaxation of containment measures.
Meanwhile, the impact of COVID-19 and the conflict between Russia and Ukraine on the Thai economy will be limited. However, the Committee will monitor key risk factors to economic recovery, especially the impact of higher prices on living costs for households. (TNA)