Thailand's economic outlook remained highly uncertain with large downside risks, so limited monetary policy room should be preserved to be used at the most effective time, minutes from the central bank's last policy meeting showed on Wednesday.
The public sector should implement sufficient targeted and front-loaded measures to support an economic recovery after a recent coronavirus outbreak, the minutes said.
On Feb 3, the Bank of Thailand (BoT)'s Monetary Policy Committee members voted unanimously to keep the one-day repurchase rate unchanged at 0.50% for a sixth straight meeting, after three cuts in the first half of 2020 to mitigate the impact of the pandemic.
"The problem facing the Thai economy was less about the level of the policy interest rate as lending rates and bond yields were already at a record low," the minutes said, adding that banking system liquidity remained ample.
The economy could expand this year at a slower pace than the 3.2% previously projected and the recovery among sectors would be uneven and increase labour market vulnerability, the minutes said.
"In the near term, the economic recovery would depend on the resolution of the recent outbreak and the contemporaneous fiscal support," the minutes said.
The BoT next reviews monetary policy on March 24, when it will also offer updated economic projections.
BoT Governor Sethaput Suthiwartnarueput told TNN News that the economy is now likely to return to pre-pandemic levels in the third quarter of 2022.
He said the economy could grow at the upper 2% levels this year, but this would largely depend on a recovery in tourism.
The committee felt the recovery could be impacted by rapid rises in the baht and would consider measures as necessary to ensure "exchange rate movements would not hinder the economic recovery".
The country largely contained its Covid-19 outbreak by mid-2020, but new infections have slowed domestic activity as the key tourist sector founders.
The economy contracted 6.1% last year, the deepest fall in 22 years, prompting the government to cut its growth outlook this year to 2.5-3.5% from 3.5-4.5%.