The Thai central bank stood pat today during its meeting, as expected. In a unanimous decision, the policy rate was kept on hold at 0.50 percent. This meeting was the first under Governor Sethaput SuthiwartNarueput and the fourth consecutive one where the monetary policy committee unanimously kept the policy rate on hold.
The Bank of Thailand acknowledged that the Thai economy rebounded above expectations in the September quarter. However, it underlined that the rebound continues to be slow and that the economy might continue to require support from low interest rates.
“We are revising our 2020 growth forecast upwards to -6.6 percent (previously -7.8 percent) to reflect the stronger-than-expected Q3 outturn. However, this translates to flat q/q seasonally adjusted growth in Q4”, said ANZ in a research report.
It is difficult for the economic rebound to gain significant momentum until the crucial tourism sector is back on its feet, and the recent rise in political tensions pose additional headwinds to the recovery.
“For 2021, our baseline scenario is for growth of 3.5%, which is premised on vaccines being widely available late next year and implies that the Thai economy will not return to its pre-pandemic level until 2022”, stated ANZ.
The Bank of Thailand continued to express concerns regarding the strength of THB. Markedly, the central bank shared that it has stepped in to curb gains.