The Bank of Thailand (BOT) monetary policy committee voted 6-1 to maintain the policy rate steady at 2.50 percent, the highest level since October 2013.
"The majority of the committee deems that the current policy interest rate is consistent with the economy converging to its potential as well as conducive to safeguarding macro-financial stability," the BOT said in a statement.
One committee member voted to reduce the policy rate by 0.25 percentage points to reflect the kingdom's lowered potential growth stemming from structural challenges and to partially alleviate borrowers' debt-servicing burden, the BOT said.
The bold decision came amid repeated calls from the government to lower the key lending rate. Deputy Finance Minister Paopoom Rojanasakul said on Tuesday that cutting the rate by 0.25 percentage points could help support the economy, which remains fragile.
The Thai economy is projected to expand 2.6 percent in 2024, driven by better-than-expected domestic demand in the first quarter, an ongoing recovery in the tourism sector, and an acceleration in government disbursement during the second quarter, said Committee Secretary Piti Disyatat.
The Southeast Asian country's headline inflation rose to a 13-month high of 1.54 percent year-on-year in May, returning to within the BOT's target range of 1-3 percent for the first time since April 2023, according to the Ministry of Commerce.
Headline inflation is projected to average 0.6 percent this year and gradually return to the target range by the fourth quarter of 2024 onwards, due to diesel price subsidies and a phase-out of excess food supply, Piti told a news conference.
He also noted that despite the current policy rate staying consistent with improving growth and the inflation outlook while fostering macro-financial stability in the long term, it remains essential to monitor economic developments, especially the recovery of exports and government measures, in deliberating monetary policy going forward.
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