Bank of Thailand holds key rate at record low as Covid-19 outbreak eases

Bank of Thailand holds key rate at record low as Covid-19 outbreak eases

The Monetary Policy Committee of the Bank of Thailand decides to keep its policy rate unchanged for 11 consecutive meetings. (Reuters photo)
The Monetary Policy Committee of the Bank of Thailand decides to keep its policy rate unchanged for 11 consecutive meetings. (Reuters photo)

The Bank of Thailand held its key interest rate unchanged on Wednesday as the country’s Covid-19 outbreak eases, allowing the government to loosen movement restrictions to boost local demand and tourism.

The bank's Monetary Policy Committee voted unanimously Wednesday to hold the one-day repurchase rate at a record-low 0.5% for an 11th straight meeting, as 19 of 22 economists in a Bloomberg survey predicted. The other three expected a 25-basis point cut.

"The committee viewed that financial measures would be more effective than a further reduction in the policy rate, which was already low," the BoT said in a statement after its policy meeting.

“While uncertainties surrounding the economic outlook remained high, "progress on vaccination and earlier-than-expected relaxation of the containment measures would help support the economy in the period ahead," the BoT said. 

Thailand is joining other Southeast Asian countries in slowly easing pandemic restrictions as it balances virus-containment measures with steps to revive the economy. The government has promoted a “living with Covid-19” strategy and ramped up its vaccination campaign, followed by a decision Monday to cut the quarantine period, shorten the nightly curfew and allow more businesses to reopen. 

Thailand reported 9,489 new Covid-19 cases Tuesday, its lowest tally since July 15. About 33% of the population has been vaccinated, up from 18% a month ago. 

Earlier this month, the central bank relaxed rules for its low-interest loan program and boosted incentives for banks to encourage debt restructuring. 

The government raised the public debt-to-GDP ratio to 70% from 60% from Sept 20 to allow for higher state borrowing to fight the outbreak. The cabinet also approved a public debt management plan for the fiscal year starting Oct 1, which includes 1.34 trillion baht in new borrowing mainly to finance the budget deficit, government investments and virus-related projects. 

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