Bank of Thailand Holds Rate at 1% for Third Meeting as Japanification Risk Deepens
Updated
Updated · Financial Times · Aug 27
Bank of Thailand Holds Rate at 1% for Third Meeting as Japanification Risk Deepens
3 articles · Updated · Financial Times · Aug 27
Summary
Thailand kept its policy rate at 1% for a third straight meeting, leaving one of the world’s lowest benchmark rates in place even as many central banks remain focused on inflation.
1.95% July inflation and 12 straight months of deflation before the Middle East war underscore why policymakers face weak price pressure rather than overheating demand.
86% household debt-to-GDP, a rapidly ageing population and shrinking consumer spending have blunted the impact of low rates, with the central bank saying monetary policy is almost at its limits.
Around 2% annual growth, a tourism sector still scarred by Covid, export pressure from China and Vietnam, and possible higher US tariffs are adding to Thailand’s structural slowdown.
Thailand could soon sit below Japan on interest rates after Tokyo lifted rates to 1% in June, reinforcing fears the country is ageing into low growth before becoming rich.