Thai central bank holds off on further stimulus, slightly upgrades 2020 GDP forecast

[BANGKOK] Thailand's central bank left its key interest rate unchanged at a record low on Wednesday and upgraded its gross domestic product (GDP) outlook slightly as South-east Asia's second-largest economy showed some signs of recovery from the coronavirus jolt.

While the central bank said private consumption and investment were likely to improve, it expected a record contraction in GDP this year and said the economy would take at least two years to return to pre-pandemic levels. Its key tourism industry continues to suffer from a ban on foreign tourists.

The Bank of Thailand's (BOT) monetary policy committee voted unanimously to keep the one-day repurchase rate steady at an all-time low of 0.50 per cent for a third straight meeting, as was widely expected.

While it raised its 2020 GDP forecast, it still expected the economy to shrink by a record 7.8 per cent in 2020, versus a previous forecast for a 8.1 per cent contraction.

It said it remained ready to use appropriate monetary policy tools if necessary and that fiscal policy should play a major role in reigniting the economy.

Thailand's economy saw its worst contraction in over two decades in the second quarter, but data has improved recently as the tourism-reliant country removed most virus restrictions and introduced steps to revive domestic activity.

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All 18 economists in a Reuters poll had expected the central bank to remain on hold after it already cut rates by 75 basis points so far this year.

In addition to three rate cuts, the BOT has provided soft loans and debt relief programmes to cushion the blow from the pandemic. The government meanwhile has planned a one trillion baht (S$45 billion) virus response package.

REUTERS