BANGKOK- A further reduction in Thailand’s policy interest rate would support inflation and improve the debt-servicing capacity of borrowers, the International Monetary Fund said.
Given high uncertainty around the economic outlook, authorities should stand ready to adjust monetary policy as needed, the Washington-based IMF said in a statement dated February 20.
It said there was little risk of a rate cut leading to increased borrowing given lending conditions remain tight in the economy.
Central bank independence with clear communication of policy moves was key to maintaining the credibility and effectiveness of monetary policy in anchoring inflation expectations, the IMF said.
In December, the Bank of Thailand left its main interest rate at 2.25 percent following a surprise quarter-point cut in October.
Last month, the central bank governor told Reuters the current policy rate remained suitable, given high household debt, even though growth could be below 2.9 percent this year.
The next policy review is scheduled for February 26.
The IMF forecast Thailand’s economic growth at 2.9 percent this year, unchanged from a report in November.
Southeast Asia’s second-largest economy expanded 2.5 percent last year, lagging regional peers.
Thailand’s economy grew less than expected into the end of 2024 and analysts said hopes of an improving outlook for this year are clouded by concerns that the country’s export engine could be hit with US tariffs.
Thailand’s economy grew 3.2 percent in the October-December quarter from a year earlier, up from a 3.0 percent pace in the previous quarter, the National Economic and Social Development Council (NESDC) said.
That missed the median forecast of 3.9 percent growth in a Reuters poll but was still the strongest annual rate in nine quarters.
On a quarterly basis, the economy grew a seasonally adjusted 0.4 percent in the October-December quarter, below the poll forecast of 0.7 percent growth and the 1.2 percent expansion in the prior quarter.
“The momentum of the economy is likely to slow down,” said Krungthai Bank economist Chamadanai Marknual
