Abstract
The Monetary Policy Committee (MPC) voted 5 to 2 to maintain the policy rate at 2.50 percent, with two members voting to cut the rate by 0.25 percentage point. The Thai economy is projected to slow in 2024 due to softening global demand and moderating growth in China. Inflation is expected to remain low but gradually pick up. The economy slowed in Q4/2023 due to weak exports and manufacturing activity. Overall, the financial system remains resilient and stable, with some low-rated corporate bond issuers facing difficulties.
Summary
The Policy Rate Decision
The Monetary Policy Committee (MPC) has voted 5 to 2 to keep the policy rate at 2.50 percent, with two members casting votes to cut the rate by 0.25 percentage point.
Economic Slowdown
The MPC’s projections show that the Thai economy is expected to slow down due to weak global demand and declining growth in China, impacting exports and manufacturing activity. Inflation is expected to remain low but gradually increase towards the target range.
Inflation and Financial System Assessment
Headline inflation is expected to be lower than previously assessed due to supply factors, while the overall financial system remains resilient and stable. Despite some low-rated corporate bond issuers facing debt rollover difficulties, overall financial conditions are stable with private sector funding costs remaining unchanged.
