BANGKOK (Aug 26): Thailand's central bank kept its key interest rate unchanged for a third straight meeting on Wednesday, as widely expected, saying policy was accommodative and supporting an economic recovery.

The Bank of Thailand's monetary policy committee voted unanimously to maintain the one-day repurchase rate at 1.00%, where it has been since February, as expected by 30 of 32 economists polled by Reuters.

"The economy expanded as expected, but growth remains low and uneven," the BOT said in a statement, noting that strong global AI demand had seen exports and private investment grow faster than expected.

There was no need for tighter policy as inflation is temporarily high, assistant governor Don Nakornthab said at a press briefing.

"The economy remains fragile. Raising interest rates would not be the right thing to do," he said.

The central bank still had room to cut rates further, but the effectiveness would be limited, Don said. "Should a crisis emerge, there is scope to cut rates further," he added.

The baht was stable and moving in line with regional currencies, Don said.

The Thai currency was largely unchanged after the decision.

"We expect interest rates to remain unchanged for the rest of this year, with the BoT likely to resume its easing cycle next year if inflation falls back as we anticipate," Gareth Leather, senior Asia Economist at Capital Economics, said in a note.

The BOT cut its policy rate six times, by a total of 150 basis points, between October 2024 and February as it tried to spark an economy weighed down by weak domestic demand and high household debt.

While central banks in South Korea, Indonesia and the Philippines have already raised interest rates after the Iran war drove energy prices higher, Thailand has kept its policy rate unchanged.

The current policy rate is appropriate to support economic recovery, the central bank said, adding its growth outlook for 2026 and 2027 was in line with its previous assessment.

At its June meeting, the BOT raised its 2026 GDP growth forecast to 2.3%, and projected headline inflation of 2.8%.

Southeast Asia's second-largest economy grew 1.9% annually in the second quarter of this year, down sharply from 2.8% growth in the previous quarter. Last year's growth of 2.4% lagged regional peers.

Headline inflation in 2026 and 2027 is projected to be lower than previously assessed, mainly due to an easing in global energy prices, the central bank said.

Headline inflation slowed to 1.95% in July, inside the central bank's target range of 1% to 3%.

The BOT said inflation was expected to rise through the first quarter of 2027 due to the effects of the El Niño weather pattern, but would then ease again.

The central bank's next rate meeting is on Oct 28, when it is due to provide updated forecasts.

"We see the committee holding rates steady based on lower inflation prints," said Kobsidthi Silpachai, the head of Capital Markets Research at Kasikornbank.

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