Until 2023, the central bank of Thailand is hoped to hold interest rates at a record low of 0.50%

Published on : Monday, November 8, 2021

The central bank of Thailand is anticipated to hold interest rates at a record low of 0.50% until 2023. A Reuter’s poll showed that the country’s tourism-dependent economy will fight a lot to find quick development in spite of welcoming quarantine-free tourists.

In an initiation to revitalize a struggling economy and pick it up from the fall down of its vital tourism sector, on Monday, the Southeast Asian nation permitted the first vaccinated visitors without quarantine to Bangkok.

In 2021, only a fraction of international tourists are expected to come compared with pre-COVID-19 levels, the monetary revival from the fall driven by the pandemic will be slow.

That, along with relatively low inflation, will provide the Bank of Thailand a space to keep its monetary policy loose for longer to support growth.

Without a doubt, all 21 economists in a Nov. 1-5 Reuters poll were unanimous in predicting the central bank would hold its one-day repurchase rate at 0.50% at its Nov. 10 meeting and through the end of next year.

From a smaller sample of forecasters eager to look further out, only two predicted a 25 basis-point rate hike in the first quarter of 2023.

“Tourism is a big part of the economy and we do not see how it can come back that quickly. Many of our target countries, especially China, still do not allow people to travel abroad,” said Phacharaphot Nuntramas, chief economist at Krung Thai Bank, the country’s second-largest bank.

“So, locally, we think 2023 will be the year tourism will return in much more full force. Whether the BOT would hike in 2023 at all would depend on how fast.”