Thailand Holds Interest Rate at 1% for Fourth Consecutive Meeting as Growth Forecasts Improve
The Bank of Thailand left its benchmark rate unchanged at 1.00% for the fourth consecutive meeting, as stronger exports and technology investment supported the outlook.
ASIA,ECONOMY
Global N Press
10/30/20263 min read
BANGKOK, October 28, 2026 — Thailand’s central bank kept its benchmark policy rate unchanged at 1.00% on Wednesday for a fourth consecutive meeting, maintaining an accommodative monetary policy stance as stronger exports and technology-related investment improved the economic outlook.
The Bank of Thailand’s Monetary Policy Committee voted unanimously to maintain the one-day repurchase rate at 1.00%. The committee said the current policy setting remained appropriate to support the economic recovery, while warning that overall growth remained below potential and the benefits of stronger activity were concentrated in certain industries.
The central bank raised its economic growth forecasts to 2.4% for 2026 and 2.1% for 2027, from previous projections of 2.3% and 1.8%, respectively.
Exports and Technology Investment Support Growth
The improved outlook reflects stronger-than-expected merchandise exports and private investment associated with the global technology and artificial intelligence (AI) cycle.
The central bank now forecasts export growth of 22% in 2026 and 15% in 2027. However, it cautioned that the benefits remain concentrated among businesses and workers in related manufacturing and service sectors, limiting their broader impact on the economy.
Private consumption continues to face pressure from elevated household debt, fragile labour-market conditions and weak purchasing power, particularly among lower-income households facing cost-of-living pressures. Small and medium-sized enterprises (SMEs) also face difficulties adapting to changing market conditions and intense competition.
Despite the improved forecasts, the central bank said Thailand’s overall economic growth remains below its potential, reflecting persistent structural constraints and uneven economic performance.
Inflation Risks Persist Amid Higher Energy Prices
The Bank of Thailand projects average headline inflation of 2.1% in 2026 and 1.3% in 2027. Core inflation is forecast to average 1.2% in 2026 and 1.3% in 2027.
The central bank expects inflation to rise temporarily through the remainder of 2026 and into early 2027, driven primarily by energy prices and the effects of El Niño. It expects inflation to return to low levels thereafter, partly because of base effects and weak domestic demand.
Uncertainty surrounding the conflict in the Middle East presents an additional inflation risk. Higher oil prices could increase production and transportation costs, while the extent to which businesses pass those costs on to consumers will influence the impact on underlying inflation.
The committee said medium-term inflation expectations remained anchored within its target range. It will continue monitoring energy prices, the pass-through of higher costs by businesses, core inflation and medium-term inflation expectations.
Tourism and Credit Conditions Remain Challenging
The central bank lowered its forecasts for foreign tourist arrivals to 32 million in 2026 and 34.5 million in 2027, citing a weaker outlook amid higher oil prices.
Credit conditions also remain uneven. Overall credit growth has picked up, driven primarily by lending to large corporations to support working capital, higher operating costs and new investment.
In contrast, SME lending continues to contract across most sectors as financial institutions remain cautious about extending credit to higher-risk borrowers. Although overall loan quality has remained stable, the central bank said the debt repayment capacity of SMEs and financially vulnerable households warrants close monitoring.
The Thai baht has depreciated against the US dollar amid shifting market expectations for US monetary policy and rising oil prices linked to concerns about the Middle East. Thai government bond yields have also risen slightly in line with global financial markets, while private-sector borrowing costs have remained broadly stable.
Policy Balances Economic Recovery and Financial Stability
The decision reflects the committee’s assessment that accommodative monetary policy, alongside targeted financial measures, remains appropriate to support Thailand’s uneven economic recovery.
Maintaining low borrowing costs can help sustain investment and economic activity, but policymakers must also consider the longer-term implications of monetary accommodation for financial stability.
The committee said it would continue assessing the inflation outlook and associated risks, as well as the long-term effects of low interest rates on macro-financial stability.
Thailand’s economic outlook will depend on export performance, technology-related investment, household consumption, tourism, energy prices and global financial conditions. Although the revised forecasts indicate stronger growth prospects, weak domestic demand, structural constraints and uneven access to credit remain challenges for a broader-based recovery.
