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

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

The Bank of Thailand (BoT) left its key interest rate unchanged at a record low on Wednesday, as widely expected, but slightly lowered its 2021 GDP growth forecast after a second wave of coronavirus infections hit economic activity.

The economy continues to rebound but the risks remain high, the central bank said in a statement, adding the economy still needs support from low borrowing rates and that monetary policy would remain accommodative.

The BoT's monetary policy committee voted unanimously to keep the one-day repurchase rate steady at a record low of 0.50% for a seventh straight meeting.

All 14 economists in a Reuters poll had expected the BoT to remain on hold this week, after delivering three rate cuts in 2020 to soften the blow from the pandemic.

The BoT trimmed its 2021 growth forecast as it cut its projected tourist figures for this year, and as a second wave of coronavirus infections in December hampered economic activity.

While Thailand has since largely contained the outbreak and has eased restrictions, its all-important tourism sector, hit by global travel curbs, continues to suffer. But the country is preparing to gradually reopen to foreign visitors.

The central bank expects the economy to expand 3.0% this year, after suffering its biggest fall in over two decades last year, but the projection is slightly more modest than the 3.2% forecast in December.

The BoT raised its export growth view to 10% this year, up from a previous forecast for a 5.7% increase.

The central bank reiterated that limited policy room should be preserved to be used at the most effective time, and that the government should continue fiscal measures to help the economy.

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