Thai Central Bank Says Holding Key Rate Steady Creates Policy Optionality

CREDIT INTEREST RATE - BANGKOK. Thailand's current policy interest rate settings were robust and can handle future risks to the economy, the central bank said on Wednesday, amid continued pressure from the government to lower borrowing costs and help jumpstart sluggish growth.

Cutting rates could help lower debt in the short run but could also induce risks in the longer term, the central bank said, adding that by holding rates steady at 2.50% it created "policy optionality".

Thailand's economy was still challenged by structural pressures while inflation remained low due to government measures and supply side factors, the Bank of Thailand (BOT) said.

After the fiscal budget was passed, government expenditure will help support the economy, BOT Senior director Pranee Sutthasri said.

Overall economic conditions were stable with loans expanding, but small businesses and households faced tighter credit conditions.

The BOT left its key interest rate unchanged for a third straight meeting on April 10.

Prime Minister Srettha Thavisin has repeatedly urged the BOT to deliver a rate cut, saying the current level is hurting businesses and investor sentiment and that the economy is in "crisis".

The BOT's governor has openly disagreed with Srettha's depiction of the economy as being in crisis, saying it was in need of structural reforms.