Key facts
- Thai monetary policy is "very, very accommodative" to support a weak economy.
- The central bank's key interest rate is 1.00%.
- The central bank left its key interest rate unchanged for a third straight time last month.
- The next policy review is scheduled for October 28.
- GDP growth is expected to exceed 3% in the current quarter.
- GDP growth is expected to be around 2% in the last quarter of 2026.
- The central bank projects GDP growth of 2.3% this year and 1.8% next year.
- Headline inflation could be around 2% this year.
- Exports for this year could be higher than the 14% growth seen in June.
- The Thai baht has weakened by 5.7% against the U.S. dollar so far this year.
- A weak baht is considered good for the Thai economy as long as it is not too volatile.
The Bank of Thailand's monetary policy is "very, very accommodative" to support a weak economy, with growth expected to exceed 3% in the current quarter and around 2% in the last quarter of 2026, according to assistant governor Don Nakornthab. The central bank left its key interest rate at 1.00% for a third straight time last month, citing uneven economic growth. Its next policy review is scheduled for October 28.
In an interview with Reuters, Don stated that the current interest rate of 1.00% is among the world's lowest and is necessary to help the economy recover. He acknowledged that the private sector anticipates an extended pause in rate adjustments but emphasized that all options remain open, meaning rates could move lower or higher. The central bank previously cut its policy rate six times, totaling 150 basis points, between October 2024 and February 2026 to stimulate an economy hampered by weak domestic demand and high household debt.
Southeast Asia's second-largest economy grew 1.9% annually in the second quarter, a slowdown from 2.8% in the prior quarter. The central bank is maintaining its June projections of 2.3% GDP growth for this year and 1.8% for next year, with updated forecasts due at the next rate meeting. Headline inflation is anticipated to be around 2% this year, down from the June forecast of 2.8%. Export growth for the year is expected to surpass the 14% seen in June.
Don also commented that the baht's weakness is beneficial for exports and the economy, provided its movements remain orderly. The currency has depreciated by 5.7% against the U.S. dollar year-to-date, a level the central bank is content with as long as volatility is managed.