Bank of Thailand keeps interest rate at 0.5%, downgrades 2021 GDP outlook

The unanimous vote to maintain the policy rate at 0.5 per cent was taken to preserve its limited policy space to support economic recovery that remained “highly uncertain”, said  Titanun Mallikamas, secretary of the Monetary Policy Committee (MPC) after Wednesday’s meeting.
Most economists had expected the policy rate to remain unchanged following three rate cuts earlier this year.
The bank also projected the Thai economy would contract 6.6 per cent in 2020, upgrading its previous forecast of 7-per-cent contraction due to improvements in private consumption and exports.
However, the BOT cut its 2021 growth outlook from 3.6 per cent to 3.2 per cent. The move follows an outbreak of more than 1,000 Covid-19 cases at the weekend. The bank forecasts 4.8 per cent growth in 2022.
It said the economic recovery remained highly uncertain and would depend in the short term on effective containment of the latest virus outbreak. 
Recovery in the longer term would rest on revival of the foreign tourist trade, Covid-19 vaccination, and the labour market, where unemployment and underemployment remained high, it added. 
The financial system remained sound while vulnerabilities among households and SMEs remained, said the bank. It also voiced concern that uneven recoveries across sectors would affect sustainability of economic growth.
Headline inflation was projected to return to the target in the middle of 2021.
The bank said it would consider additional measures to rein in the baht, which has been rising rapidly against the dollar to the dismay of Thai exporters. 
Monetary policy must remain accommodative, said the BOT. 
In deliberating monetary policy going forward, the bank said it would monitor government recovery measures and also risks such as the fresh virus outbreak.