On Feb. 3, the Bank of Thailand (BOT)'s committee members voted unanimously to keep the one-day repurchase rate unchanged at 0.50% for a sixth straight meeting, after three cuts in the first half of 2020 to mitigate the impact of the pandemic.
"The problem facing the Thai economy was less about the level of the policy interest rate as lending rates and bond yields were already at a record low," the minutes said, adding that banking system liquidity remained ample.
Southeast Asia's second-largest economy could expand this year at a slower pace than the 3.2% previously projected and the recovery among sectors would be uneven and increase labour market vulnerability, the minutes said.
"In the near term, the economic recovery would depend on the resolution of the recent outbreak and the contemporaneous fiscal support," the minutes said.
The BOT next reviews monetary policy on March 24, when it will also offer updated economic projections.
Bank of Thailand Governor Sethaput Suthiwartnarueput told TNN News that the economy is now likely to return to pre-pandemic levels in the third quarter of 2022.
He said the economy could grow at the upper 2% levels this year, but this would largely depend on a recovery in tourism.
The committee felt the recovery could be impacted by rapid rises in the baht and would consider measures as necessary to ensure "exchange rate movements would not hinder the economic recovery".
Thailand largely contained its COVID-19 outbreak by mid-2020, but new infections had slowed domestic activity as the key tourist sector founders.
The economy contracted 6.1% last year, the deepest fall in 22 years, prompting the government to cut its growth outlook this year to 2.5-3.5% from 3.5-4.5%.
(Reporting by Orathai Sriring; Editing by Ed Davies)
By Orathai Sriring