The Bank of Thailand’s Monetary Policy Committee (MPC) unanimously held the policy rate at 1.00%, judging that an accommodative stance remained appropriate to support below-potential, uneven growth despite a temporary supply-driven rise in inflation. The rate had fallen from 1.50% following 25-basis-point cuts in December 2025 and February 2026. Headline inflation is projected to average 2.1% in 2026 and 1.3% in 2027, rising into early 2027 because of energy prices and El Niño before returning to low levels as base effects and weak domestic demand weigh. Medium-term inflation expectations remain anchored within the target range. Economic growth is projected at 2.4% in 2026 and 2.1% in 2027, supported by merchandise exports and private investment linked to the technology and artificial intelligence cycle, although the benefits remain concentrated. Overall credit growth has picked up, driven by large corporate loans, while lending to small and medium-sized enterprises continues to contract. The baht depreciated against the USD as market expectations shifted toward a more restrictive U.S. monetary policy outlook. Higher oil prices amid uncertainty surrounding the Middle East conflict are adding inflation and exchange-rate pressures. The MPC will monitor inflation risks, including firms’ cost pass-through and limited energy-subsidy capacity, alongside the effects of low interest rates on long-term macro-financial stability.

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