In brief
At its meeting on October 28, the Bank of Thailand voted to keep the one‑day repurchase rate at 1% for the fourth consecutive session, signaling cautious optimism while noting uneven economic gains and near‑term inflation risks. The bank forecasts 2026 GDP growth of 2.4% and 2027 growth of 2.1%, while tourism arrivals are expected to decline.
The Bank of Thailand (BOT) announced on Wednesday, October 28, that it would maintain its policy rate at 1 percent, marking the longest pause in the current easing cycle that began in October 2024. The decision, made by the monetary policy committee in a unanimous vote, reflects the bank’s view that the current rate is suitable for sustaining the country’s uneven economic recovery.
In a statement released immediately after the meeting, the BOT said, The committee views that the current policy rate is appropriate to support economic recovery.
Centering its outlook on private investment, the bank upgraded its 2026 GDP growth forecast to 2.4 percent from the 2.3 percent level issued in June, citing stronger‑than‑expected merchandise exports and the global technology and artificial intelligence boom. The 2027 projection was also raised to 2.1 percent from 1.8 percent.
However, the BOT cautioned that growth remains below potential. Secretary of the monetary policy committee Don Nakornthab explained that gains have largely benefited manufacturing and service businesses tied to the tech sector, with limited spill‑over to the broader economy. He added that private consumption growth had been trimmed to 2.3 percent for the year from an earlier estimate of 2.6 percent, citing high household debt, a fragile labor market and weak purchasing power.
In terms of inflation, the BOT expects headline inflation to average 2.1 percent in 2026, down from the 2.8 percent projected in June. The 2027 forecast was lowered to 1.3 percent, comfortably inside the bank’s 1 percent–3 percent target range. The bank noted that inflation is likely to climb through the rest of 2026 and into early 2027, driven largely by energy costs and the El Nino weather pattern, before easing because of base effects and weak domestic demand.
Tourism, a key pillar of Thailand’s economy, is expected to see a decline. The BOT projected that foreign tourist arrivals would slip to 32 million in 2026 from 33 million in 2025, citing higher oil prices as a contributing factor.
Regarding monetary stability, the bot said it would continue to monitor inflation and the broader impact of low interest rates on macro‑financial stability. The policy holds a cautious stance, keeping options open should the outlook shift.
Although the BOT’s policy rate remains unchanged, the bank’s longer‑term stance is under scrutiny. The committee reiterated its commitment to an accommodative approach while remaining vigilant about inflationary risks.
Stakeholders in the private sector and financial markets have noted the significance of the decision. A number of observers point to the BOT’s desire to keep borrowing costs low in order to support manufacturing exports and keep investment conducive to a rebound, while cautioning that the uneven distribution of growth might create pressures on employment and sectoral output.
While the policy rate is unchanged for now, the bank has signaled that it will revisit its stance as new data emerges. The main uncertainties identified by the BOT include the sustainability of uneven economic gains, the trajectory of inflation under persistent energy price shocks and weather‑related factors, and the potential impact of a dip in tourism due to rising oil costs.
