Commerzbank’s Charlie Lay reports that the Bank of Thailand kept its policy rate at 1.00%, with the MPC maintaining a hold but signalling a less dovish stance. Authorities highlight financial stability risks from prolonged low rates and see scope for gradual hikes as growth improves, yet expect policy to stay on hold through 2026–2027. USD/THB remains near the top of its recent 32.50–34.00 range.

Policy on hold, gradual hikes only later

“The Bank of Thailand (BoT) left its benchmark one-day repurchase rate at 1.00% as expected. The Monetary Policy Committee (MPC) voted 6-0, with one member absent, marking its fourth consecutive hold since the 25bp cut in February. The policy statement suggests a subtle shift towards a less dovish stance, although an imminent rate hike is unlikely.”

“BoT highlighted potential financial stability risks from keeping interest rates low for an extended period, while Assistant Governor Don Nakornthab indicated that rates could be raised gradually as the economy strengthens to rebuild policy space. However, with growth still below potential and inflation largely supply-driven, BoT is likely to remain on hold for the remainder of 2026 and potentially through much of 2027. We would need to see a sustained rise in core inflation or a broad-based economic recovery for a change in BoT’s stance.”

“For THB, downside pressures persist due to Fed tightening, higher oil prices, and Thailand’s relatively low interest rates. USD/THB was unchanged yesterday at around 33.73. It remains at the upper end of the 32.50-34.00 range seen over the past five months.”

“BoT’s projection of a USD18bn current-account surplus in 2027 could provide some medium-term support for THB, although the currency is likely to remain sensitive to USD movements and global energy prices in the near term.”