Bank of Thailand Holds Rate at 1% Amid War Risks

The Bank of Thailand maintained its policy rate at 1.00% on April 29, 2026, following a unanimous 6-0 vote by its monetary policy committee. This decision keeps borrowing costs at their lowest level since September 2022 after two previous rate cuts. The central bank is holding the rate steady to support an economy facing headwinds from conflicts in the Middle East, which have increased business costs and eroded household purchasing power.

Due to energy-driven supply shocks and travel constraints affecting tourism, the bank lowered its 2026 economic growth forecast to 1.5% from 1.9%. Headline inflation for 2026 is now projected to average 2.9%, the highest level since 2022, though it is expected to moderate to 1.5% in 2027 as supply pressures ease. Assistant Governor Don Nakornthab noted that while a prolonged conflict could push inflation above 5% and growth below 1%, there is currently no need to worry about stagflation.

To mitigate these risks, the Government of Thailand approved oil price subsidies and a consumer subsidy scheme for June, with plans to borrow up to 500 billion baht by October. Despite these challenges, the central bank suggests growth could exceed expectations if government stimulus continues and global demand for technology products supports merchandise exports.