Bank of Thailand holds key rate at record low, cuts 2021 GDP outlook

FILE PHOTO: Thailand's central bank is seen at the Bank of Thailand in Bangkok, Thailand April 26, 2016. (Reuters photo)
FILE PHOTO: Thailand’s central bank is seen at the Bank of Thailand in Bangkok, Thailand April 26, 2016. (Reuters photo)

Thailand’s central bank left its key interest rate unchanged at a record low on Wednesday, as widely expected, but lowered its 2021 economic growth forecast as the country struggles with a third wave of coronavirus infections.

The Bank of Thailand’s (BoT) Monetary Policy Committee voted unanimously to hold the one-day repurchase rate at 0.50% for a ninth straight meeting.

All 22 economists in a Reuters poll had expected the BoT to remain on hold after three rate cuts last year.

The BoT now expects Southeast Asia’s second largest economy to grow 1.8% this year, down from a previous forecast for 3.0%.

On June 1 the government approved fresh economic stimulus measures worth 140 billion baht to bolster the economy, including cash handouts and co-payment programmes. Parliament this month approved a $16 billion borrowing plan to meet fiscal needs.

The central bank earlier announced a limited debt moratorium until year-end to help small and medium-sized businesses hurt by the outbreak, and will decide later this year whether to extend lenders’ obligatory contribution to a bailout fund for financial institutions.

Prime Minister Prayut Chan-o-cha this week moved to allow more social activity in the capital, even as Covid-related fatalities rose to a record Wednesday, which took total deaths to 1,744, since the pandemic began last year. As of June 21, about 11% of the population had received at least a first dose of anti-Covid vaccine.

Thailand’s urgency in reopening stems from its dependence on tourism, which contributed about one-fifth of economic output before the pandemic. The Cabinet on Tuesday gave final approval for the Phuket “sandbox,” which will allow quarantine-free travel for vaccinated visitors to the popular tourist island from July 1.

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