Thailand’s Central Bank Adjusts Monetary Policy Outlook

By Orathai Sriring and Thanadech Staporncharnchai

BANGKOK (Reuters) – Thailand’s central bank is ready to adjust monetary policy if the outlook changes as the economy faces heightened uncertainty over geopolitical issues and the economic policies of major trading partners, officials said on Monday.

Monetary policy will depend on the economic outlook, while data will be used to assess the outlook, said Deputy Governor Piti Disyatat. “If the outlook changes significantly or the risks to the outlook change significantly, it is a reason to adjust the policy,” he stated at a monetary policy forum.

Last month, the Bank of Thailand left its key interest rate unchanged at 2.25%, following a surprise cut in October. The next rate review is scheduled for Feb. 26.

Central bank officials described the decision to maintain the key interest rate as a “robust policy,” given that monetary policy becomes less effective under high uncertainty. Senior Director Surach Tanboon remarked, “According to the BOT’s study, cutting the policy interest rate will have a limited positive effect on the economy during high uncertainty periods.”

The implementation of monetary policy must be flexible and able to accommodate various situations, noted Assistant Governor Sakkapop Panyanukul. “We term it a robust policy, emphasizing the importance of policy buffers in various aspects and appropriately combining policy tools with developments,” he explained.

At last month’s review, the central bank maintained its growth forecast at 2.7% for 2024 and 2.9% for 2025. Sakkapop indicated that Southeast Asia’s second-largest economy is expected to grow over 3% annually in the last quarter of 2024, with GDP data due in February.

The economy is likely to grow closer to potential, supported by exports, tourism, and domestic demand. A paper prepared for the forum noted that potential U.S. protectionism under incoming President Trump could boost Chinese goods to Thailand.

The Thai baht is expected to be more volatile this year, influenced by global factors, Sakkapop added. “In terms of direction, we must manage the volatility that will continue to increase,” he concluded.