By Orathai Sriring and Kitiphong Thaichareon
BANGKOK (Reuters) – Thailand’s central bank left its key interest rate unchanged at a record low on Wednesday, maintaining support for a pandemic-hit economy facing global risks.
It reduced its growth outlook for 2022 while saying it expected inflation to come in above target this year before falling back within its 1-3% target range next year.
The Bank of Thailand’s (BOT) monetary policy committee unanimously voted to hold the one-day repurchase rate at 0.50%, where it has been since May 2020, for a 15th straight meeting. The central bank cut the rate three times in 2020.
Wednesday’s decision was expected by all 22 economists in a Reuters poll.
The BOT lowered its 2022 economic growth forecast to 3.2% from the 3.4% predicted in December, but raised its headline inflation forecast to 4.9% from 1.7% seen previously. The central bank is now predicting inflation will slow to 1.7% in 2023.
While sanctions on Russia have increased the costs of goods, they will not derail the overall recovery path, the BOT said in a statement after its policy meeting.
Southeast Asia’s second-largest economy grew 1.6% last year, which was among the lowest growth rates in the region, after a 6.2% contraction in 2020.
While inflation hit a 13-year high of 5.28% in February, driven mainly by higher energy prices caused by the Russia-Ukraine war, economists say policy tightening is unlikely soon because the recovery remains fragile, with the vital tourism industry still struggling.
On Monday, Finance Minister Arkhom Termpittayapaisith told Reuters higher inflation should be temporary and interest rates should stay low to support the recovery.
The BOT maintained its forecast for foreign tourists at 5.6 million this year, after around 428,000 actual visits in 2021. That compared with 40 million foreign tourists in pre-pandemic 2019, when their spending accounted for 11% of GDP.
However, the BOT raised its forecast for export growth this year to 7.0% from 3.5% seen earlier.
(Additional reporting by Satawasin Staporncharnchai; Editing by Bradley Perrett & Simon Cameron-Moore)
