Bank of Thailand base rate to hold through 2022: Fitch

This comes at the back of a bleak economic outlook due to the recent COVID-19 outbreak.

The Bank of Thailand will keep its base rate on hold through 2022 as the economic outlook worsens as recent cases of COVID-19 ravages the country, according to Fitch.

Last 4 August, the Bank of Thailand announced its decision to keep its base rate at 0.50%, as it has done since May 2020. The Monetary Policy Committee voted 4 to 2 on the decision, with two members voting for a further 25 base points cut to 0.25%.

In a statement released by the Bank of Thailand, it said that the committee viewed that risks to the economic outlook remained and support must be provided by accelerating the distribution of liquidity and reducing the debt burden for those who were affected. 

“Most members viewed that financial measures would be more effective than a further reduction in the policy rate which was already low. Most members thus voted to maintain the policy rate. Nevertheless, two members voted to cut the policy rate to support other measures in shoring up the economy and mitigate heightened risks in the period ahead,” the central bank said.

Fitch said the resurgence of COVID-19 and Thailand’s slow vaccination rate – just 5.7% of people are fully vaccinated as of August 2 – means that the country’s economic recovery may not truly get underway until 2022.

“Given the loss of output in 2020 and the delays to the economic recovery, we believe the Bank of Thailand will see ample room to keep its base rate on hold through 2022 as well. Indeed, we believe the Bank of Thailand will look past the US Fed’s hawkish turn in June and tie its monetary policy to the recovery of the Thai economy,” Fitch said.

Fitch said it will be revising the country’s economic growth outlook of 3% as soon as Thailand releases its second quaarter 2021 gross domestic product on 17 August.