Thailand’s MPC keeps policy rate at 1% as growth stays uneven

Don Nakornthab, secretary of the Monetary Policy Committee (MPC), announced the outcome of the MPC meeting on Wednesday (June 24, 2026).

The committee voted unanimously, by 7-0, to maintain the policy rate at 1.00% per annum.

The Thai economy is likely to expand more strongly than previously assessed, but growth remains low and uneven, while inflation is expected to rise because of supply-side factors before easing as those pressures gradually subside.

Overall credit growth remains low, with loan quality among SMEs and vulnerable households needing to be monitored.

The committee viewed that accommodative monetary policy, together with targeted financial measures, has helped support the economic recovery.

It is therefore deemed appropriate to keep the policy rate unchanged at this meeting, while monitoring inflation developments and medium-term inflation expectations.

The Thai economy is projected to grow by 2.3% in 2026 and 1.8% in 2027, respectively, supported by stronger-than-expected momentum from exports and investment linked to the technology and artificial intelligence cycles, as well as government measures to ease the impact of the energy crisis.

The outlook is also supported by an improving trend in the war in the Middle East.

The impact of the war on manufacturing and tourism has been less than previously assessed, while large businesses have been able to adjust better than expected.

However, overall economic growth remains low and uneven.

SMEs have limited room to adjust and continue to face intense competition, while most households are under pressure from slower income growth and higher living costs, which will drag on private consumption after government measures end.

Headline inflation in 2026 and 2027 is close to the previous assessment, averaging 2.8% and 1.4%, respectively.

Inflation over the rest of 2026 is expected to rise above the target range as energy prices and costs are passed through, before declining in 2027.

This would follow the gradual easing of supply-side factors and the effect of a high base in the previous year.

Core inflation in 2026 and 2027 is close to the previous assessment, averaging 1.5% and 1.4%, respectively, while medium-term inflation expectations remain anchored within the target range.

Although the war situation is likely to improve, price pass-through by businesses amid still-high costs, as well as medium-term inflation expectations, must be monitored.

The baht weakened against the US dollar as the US dollar strengthened in line with the direction of US monetary policy.

Overall interest rates in the financial institution system were stable, while total credit expanded at a low level and was mainly driven by lending to large businesses.

SME loans continued to contract, as financial institutions remained cautious about lending to higher-risk debtors.

Overall loan quality was stable, but debt-servicing ability among SME debtors and vulnerable households must be monitored in the period ahead.

Financial institutions should also be encouraged to continue targeted financial measures for vulnerable groups.

Under a monetary policy framework aimed at maintaining price stability while supporting sustainable economic growth and preserving financial system stability, the committee viewed the current rate as appropriate for supporting the economic recovery.

Inflation was rising because of supply-side factors, but its outlook and risks must continue to be monitored.