BANGKOK: Thailand’s central bank left its key interest rate unchanged at a record 0.5% on Wednesday May 5, preserving limited ammunition to support Southeast Asia’s second-largest economy struggling with a third wave COVID-19 infections.
The latest outbreak has slowed domestic activity in the tourism-dependent economy as it prepares to reopen to travelers, but increased exports, another key driver of growth, have provided some support.
The Bank of Thailand’s (BOT) Monetary Policy Committee unanimously voted to keep the overnight repurchase rate unchanged for an eighth consecutive meeting.
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The 14 economists in a Reuters poll expected the Bank of Thailand (BOT) to remain on hold after three rate cuts in the first half of 2020 to mitigate the impact of the pandemic on the economy which has suffered its worst. deep recession for more than two decades.
“Economic growth is likely to slow sharply due to the third wave of COVID-19,” the central bank said in a statement.
Monetary policy will remain accommodative to support economic activity, the BOT said.
The BOT reiterated that the limited room for maneuver should be preserved to be used at the most effective time.
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The third wave of COVID-19, spurred by the highly transmissible variant B117, has accounted for more than half of the total number of cases since the start of the pandemic. The outbreak came as Thailand prepared to reopen more widely to foreign tourists and the global vaccine rollout paved the way for air travel to resume.
The BOT said the number of foreign tourists would be lower than the 3 million forecast three months ago. This compares to nearly 40 million in 2019, before the pandemic.
Last week, the finance ministry cut its GDP growth outlook for 2021 to 2.3%, from 2.8%, but raised its export growth forecast to 11%, from 6.2% previously.
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