Bank of Thailand holds its rate at 1%, lifts growth, cuts inflation view

What happened. On 28 October at 2:00 pm Bangkok time (07:00 UTC) the Bank of Thailand said its committee voted unanimously to keep the policy rate at 1%. That is the one-day repurchase rate, the base price of money in the country. It has been at this level since February 2026, and this is the fourth decision in a row with no change.

Why hold. The bank says easy policy plus targeted measures is helping the recovery. The economy is gaining momentum from tech and the AI cycle, but growth is still below potential and the gains are concentrated. Household spending is held back by high household debt, a fragile job market and weak buying power.

Forecasts. The bank now expects GDP growth of 2.4% in 2026, up from 2.3% in June, and 2.1% in 2027, up from 1.8%. It sees headline inflation at 2.1% in 2026, down from 2.8% in June, and 1.3% in 2027, down from 1.4%. The target is 1% to 3%. Reuters says inflation was 2.82% in September.

Inflation. The bank says inflation has risen for a while because of supply, mainly energy and fresh food, and will return to low levels as base effects kick in and demand stays weak. It is also watching how firms pass higher costs into prices and the limited room to keep subsidising energy.

Baht and loans. The baht has weakened and government bond yields have risen along with global markets, but so far that has had little effect on borrowing costs. Loan growth comes mainly from large companies. Loans to small and mid-sized firms are shrinking, and retail loans are growing slowly.

What next. The committee will watch inflation, the risks around it and how a long period of low rates affects financial stability. Reuters says the next meeting is on 23 December. This is not advice to buy or sell.

Fatos confirmados

• On 28 October 2026 the Bank of Thailand's Monetary Policy Committee voted unanimously to keep the policy rate at 1%.^[1][2]
• It is the fourth straight hold; all 26 economists in a Reuters poll expected no change.^[2]
• GDP growth forecast: 2.4% for 2026 (2.3% in June) and 2.1% for 2027 (1.8% in June).^[1][2]
• Headline inflation forecast: 2.1% for 2026 (2.8% in June) and 1.3% for 2027 (1.4% in June); the target is 1 to 3%.^[1][2]
• The economy is gaining momentum from tech and the AI cycle, but growth is below potential and the gains are concentrated.^[1]
• The baht has weakened and bond yields have risen with global markets, but the effect on funding costs is limited.^[1]
• SME loans are contracting and retail loans are growing weakly.^[1]
• Headline inflation was 2.82% in September.^[2]
• The next rate meeting is on 23 December; most economists expect 1% through the end of 2027.^[2]

Implicações

• ConfirmadoThe Bank of Thailand is keeping its easy policy in place.
• Nossa leituraIf inflation falls as the bank expects, a rate rise in the coming months looks unlikely.
• Nossa leituraThe gap with US and other rates may keep weighing on the baht.

Ainda não se sabe

• How the baht and bonds moved after the decision: we did not check in detail.
• How oil prices will affect inflation before December.
• The outcome of the 23 December meeting.

Quem é afetado

Thailand, Asia. People who live or do business in Thailand, and anyone following the baht, Asian markets and central bank rates

Fontes

1. Bank of Thailand: Press Conference: Monetary Policy Committee Decision 5/2026 28 de outubro de 2026 · oficial
2. Reuters via Investing.com: Thai central bank keeps interest rate unchanged, as expected 28 de outubro de 2026 · mídia