BoT Backs Accommodative Policy Amid Uneven Recovery: Oct. Minutes

Thailand's monetary policy should remain accommodative to support an economic recovery that remains weak and uneven, with growth below potential, according to the October policy meeting minutes. The committee emphasised that monetary policy primarily manages aggregate demand and economic stability, while fiscal and targeted government measures are needed to address structural challenges, inequality, limited SME financing, and wobbling competitiveness. Members also cautioned that maintaining low interest rates amid global monetary policy divergence could heighten financial stability risks through capital flows, exchange rate volatility, and domestic investor behavior, although Thailand's external stability remained strong with no significant signs of vulnerability. Board members voted to keep the policy rate unchanged, noting that oil prices and El Niño could intensify inflationary pressures and cost pass-through, warranting close monitoring.

The Bank of Thailand kept its benchmark interest rate unchanged at 1.00% for a fourth consecutive meeting in October 2026, as widely expected, marking its longest stretch without a rate change in two years. The decision was unanimous, with one committee member absent, as policymakers maintained an accommodative stance to support an uneven economic recovery. The Thai economy is projected to grow by 2.4% in 2026 and 2.1% in 2027, supported by stronger-than-expected exports and investment linked to the technology and AI cycle. However, growth remains below potential, while high household debt and fragile purchasing power continue to weigh on private consumption. Headline inflation is forecast to average 2.1% in 2026 and 1.3% in 2027, rising temporarily through early 2027 due to higher energy prices and El Niño before easing as domestic demand remains weak. The central bank warned that Middle East uncertainty and cost pass-through could push inflation above its projections.

Bank of Thailand sees a continued need for accommodative monetary policy as the economic recovery remains uneven, the August meeting minutes showed. The Monetary Policy Committee unanimously kept the one-day repurchase rate at 1% for a third consecutive meeting, citing weak and uneven growth. However, policymakers cautioned that further easing outside a crisis could have limited benefits relative to potential side effects. “Although policy space remained, further monetary policy easing in a non-crisis environment might yield limited additional benefits relative to its potential side effects,” the minutes said. With the policy rate already low by historical standards, the committee stressed the need to preserve room to respond to unexpected shocks. It also flagged risks from the Middle East conflict, trade protectionism and inflation.