(Bloomberg) -- Thailand’s central bank left its key interest rate unchanged after a surprise cut in October, warning of rising future uncertainties as it resists government calls for further policy easing.
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The Monetary Policy Committee voted unanimously to keep the one-day repurchase rate steady at 2.25% at Wednesday’s meeting, a decision expected by 21 of the 23 economists surveyed by Bloomberg. The baht was little changed by the decision, which came shortly before neighboring Indonesia held its main rate unchanged at 6%.
“We remain neutral — we are not stepping on the brake and we are not accelerating,” Assistant Governor Sakkapop Panyanukul said at a press conference in Bangkok. “Over the short term, the economic recovery remains on track, but we see higher risks ahead.”
The Thai economy faces challenges ranging from increased competition from external factors, and uncertainties from policies being enacted by major economies, it said in a statement, maintaining its forecast of 2.7% growth for 2024 and seeing an expansion of 2.9% in 2025.
“The central bank indicated increasing uncertainties in the period ahead, likely referring to US President-elect Donald Trump’s return to the White House,” Tamara Mast Henderson, an economist with Bloomberg Economics, wrote shortly after the decision. But even as it resisted government pressure this time, more cuts may be in the pipeline, she said.
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The central bank defended the current rate as “consistent” with the economic outlook and inflation that is trending towards the 1% to 3% target range, saying it preserves “policy space” amid growing uncertainties. The bank has only cut rates once this year, despite pressure from the government to lower borrowing costs to spur growth and reduce the burden on borrowers.
The central bank highlighted both positive and negative factors for the economy as it decided to leave rates unchanged.
“Tourism and domestic demand continue to be the main drivers, as well as exports of electronics and machinery in line with the expected recovery in the global technology cycle,” it said. “However, the economic recovery remained uneven across sectors. Whereas tourism-related services improved, the recovery for (small and medium enterprises) and certain manufacturing industries faced pressures from declining competitiveness.”
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It also noted that the baht has depreciated against the US dollar since the October meeting, due to changes in expectations for US rates. The baht held its loss of 0.1% against the dollar after the rate announcement, while the benchmark stock index reversed gains to trade little changed.