BANGKOK: Thailand's central bank left its key interest rate unchanged for a third straight meeting on Wednesday, as widely expected, resisting government pressure to lower borrowing costs to help revive Southeast Asia's second-largest economy.
The Bank of Thailand's (BOT) monetary policy committee voted 5-2 to hold the one-day repurchase rate at 2.50 per cent, the highest in more than a decade.
It had raised the rate by 200 basis points since August 2022 to curb inflation.
"The majority of the committee deems that the current policy interest rate is conducive to safeguarding macro-financial stability, and that the effectiveness of monetary policy on resolving structural impediments is limited," the BOT said in a statement.
Of 26 economists in a Reuters poll, 16 had predicted the BOT would hold the rate steady on Wednesday, while the other 10 had forecast a quarter-point cut.
The Thai baht was largely unchanged after the decision, trading at 36.31 to the greenback. The baht is one of the worst-performing emerging Asia currencies, having lost nearly 6 per cent year-to-date.
BOT Governor Sethaput Suthiwartnarueput said last month the central bank must ensure the policy was appropriate for supporting long-term growth while the risk of deflation was low.
Headline consumer inflation has been below the central bank's 1 per cent to 3 per cent target range for nearly a year, driven by energy subsidies. Consumer prices fell 0.47 per cent in March, less than a 0.77 per cent decline in February.
The central bank on Wednesday said it expects headline inflation to be 0.6 per cent this year versus a previous forecast in February of 1 per cent.
Miguel Chanco at Pantheon Macroeconomics said, "our core belief is that the start of gradual easing is imminent, with GDP growth soft and weakening, and CPI still in outright deflation".
"We've been expecting the BOT to keep rates higher than necessary for a bit longer, just to demonstrate its independence as an institution amid the government's explicit pleas for cuts as soon as possible."
The central bank's next rate review is June 12. - Reuters