BANGKOK (July 8): Thailand's interest rates would rise when the economy returns to normal and grows at its potential rate of at least 2.7%, the central bank said on Wednesday, after it kept its key interest rate unchanged at its June meeting to support recovery.

Inflation was contained and there was currently no need to raise rates, but policy tightening could be warranted if there were risks to financial stability, if inflation was no longer under control or if the economy reached its growth potential, Assistant Governor Don Nakornthab told a briefing.

At its June meeting, the Bank of Thailand's monetary policy committee unanimously voted to maintain the one-day repurchase rate at 1.00% for a second straight time and upgraded its 2026 economic growth forecast to 2.3%, before easing to 1.8% next year.

Thailand's accommodative monetary policy stance and targeted financial measures are supporting an economic recovery, according to minutes of that meeting released on Wednesday.

"Looking ahead, the committee assessed that the current policy rate was conducive to supporting economic recovery while inflation accelerated due to supply-side factors," the minutes said, adding that risks on both growth and inflation required careful monitoring.

Headline inflation slowed to 2.42% in June, inside the central bank's target range of 1% to 3%.

Inflation could come in lower than previously projected due to falling oil prices and lower-than-expected inflation in June, said senior central bank director Surach Tanboon.

At the policy review, the central bank forecast headline inflation at 2.8% this year and 1.4% next year.

Inflation for the remainder of 2026 is expected to exceed the target range driven by the pass-through of energy and production costs, the minutes showed.

Inflation risks also remain from a possible El Nino event later this year and uncertainty surrounding the situation in the Middle East, assistant governor Don said.

In the days after the June meeting, BOT governor Vitai Ratanakorn said there was no need to raise interest rates for now. The next monetary policy review is on Aug 26.

The central bank said it expected annual economic growth of around 2% in the second quarter and about 3% in the third quarter.

Southeast Asia's second-largest economy, which has lagged regional peers since the pandemic, grew by 2.4% last year.

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