Thai central bank seen to hold key interest rate at record low

Bangkok

THAILAND'S central bank is widely expected to leave its key interest rate at a record low on Wednesday as tougher coronavirus restrictions have been eased to support a flagging economy, a Reuters poll showed on Monday.

The South-East Asian country's worst coronavirus outbreak led to restrictions in July and August that hit economic activity, but the curbs have since been eased and Thailand will soon reopen to more vaccinated visitors.

The government also recently lifted the public debt ceiling for more fiscal flexibility to fight the outbreak, while the Bank of Thailand (BOT) governor on Monday said the central bank was ready to introduce measures as needed.

In the poll, 20 of 23 economists expect the BOT's Monetary Policy Committee (MPC) to hold the one-day repurchase rate at 0.50 per cent this week to preserve limited policy ammunition.

Three economists predicted a quarter-point cut, citing weak growth and the MPC's split decision at the August meeting, when it cut the 2021 growth forecast to 0.7 per cent from 1.8 per cent.

The BOT will give a new forecast on Wednesday. Governor Sethaput Suthiwartnarueput said on Monday growth might not reach 1 per cent this year.

Last month, Mr Sethaput said interest rates were a blunt tool, while Somchai Jitsuchon, a non-central banker on the MPC, said that lower rates would not help much.

The last meeting's split vote raised a 30 per cent chance of a rate cut "but the economy has since improved so the BOT may save its ammunition for the worst case", said Panundorn Aruneeniramarn, an economist at Siam Commercial Bank. REUTERS