The International Monetary Fund (IMF) is advocating for additional reductions in Thailand’s policy interest rate, aiming to counter weak inflation and lessen the financial pressure on domestic borrowers.
This comes after the Bank of Thailand’s decision last October to lower the rate, a move the IMF endorsed while urging further cuts to enhance inflation support and improve the debt-servicing capacity of Thai households. Household debt levels in Thailand have surged to $486 billion, up from approximately $400 billion at the start of 2019.
This recommendation arises amidst Prime Minister Paetongtarn Shinawatra’s direct plea for a rate cut, as last year’s GDP growth of 2.5% fell short of expectations by economists. The Bank of Thailand’s monetary policy committee is scheduled to convene on February 26 to reevaluate the interest rate.
In a recent statement, the IMF advised that the Thai authorities should be prepared to shift their monetary policy based on evolving data and economic forecasts, given the prevailing uncertainties.
Despite earlier measures, the central bank maintained its policy rate at 2.25% in December following an unanticipated 0.25 percentage point reduction in October. A current Bloomberg News survey reveals that 10 out of 13 economists anticipate the central bank will keep rates unchanged at the upcoming policy meeting.
