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Thai central bank leaves rate at record low, warns of COVID-19 risk

Thai central bank leaves rate at record low, warns of COVID-19 risk

Testing centres are screening people for Covid-19 in Thailand AFP/Jack TAYLOR

BANGKOK: Thailand's central bank left its key interest rate unchanged at a record low of 0.5 per cent on Wednesday (May 5), preserving its limited ammunition to support Southeast Asia's second-largest economy struggling with a third wave of COVID-19 infections.

The latest outbreak has slowed domestic activity for the tourism-reliant economy at a time when it was preparing to reopen to travellers, but increased exports, another key growth driver, have lent some support.

The Bank of Thailand's (BOT) monetary policy committee voted unanimously to keep the one-day repurchase rate unchanged for an eighth straight meeting.

READ: Thai finance ministry slashes GDP outlook over COVID-19 return

All 14 economists in a Reuters poll had expected the Bank of Thailand (BOT) to remain on hold after three rate reductions in the first half of 2020 to ease the impact of the pandemic on the economy that suffered its deepest slump in over two decades.

"Economic growth is likely to sharply slow due to the third COVID-19 wave," 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 policy room should be preserved to be used at the most effective time.

READ: Thai PM granted sweeping powers to curb COVID-19

The third COVID-19 wave, spurred by the highly transmissible B117 variant, has accounted for more than half of total cases since the start of the pandemic. The outbreak came as Thailand prepared to reopen more broadly to foreign tourists and global vaccine rollouts paved the way for air travel to pick up.

The BOT said the number of foreign tourists would be less than the 3 million projected three months ago. That compares with nearly 40 million in 2019, before the pandemic.

Last week, the finance ministry cut its 2021 GDP growth outlook to 2.3 per cent from 2.8 per cent but raised its export growth forecast to 11 per cent from 6.2 per cent seen earlier.

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Source: Reuters/aj

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