Thailand’s central bank has left its key interest rate unchanged, saying economic growth remains weak and uneven despite signs of recovery.

As reported by The Edge Malaysia, the Bank of Thailand’s Monetary Policy Committee unanimously voted to keep the one-day repurchase rate at 1%, marking its third consecutive meeting without a change. The rate has remained at this level since February.

The central bank said economic expansion was broadly in line with expectations, while strong global demand for artificial intelligence products had helped exports and private investment perform better than anticipated.

However, assistant governor Don Nakornthab said the economy remained fragile and there was no justification for higher borrowing costs, despite temporarily elevated inflation.

He added that the central bank retained room to reduce rates if an economic crisis emerged, although further cuts could have limited impact. The baht, meanwhile, was broadly stable and tracking regional currencies.

Economist Gareth Leather of Capital Economics expects rates to remain unchanged for the rest of 2026, with monetary easing potentially resuming next year if inflation declines as forecast.

The Bank of Thailand reduced its policy rate six times between October 2024 and February, cutting it by a combined 1.5 percentage points to support an economy affected by weak domestic demand and high household debt.

Thailand’s economy expanded by 1.9% year on year in the second quarter, slowing from 2.8% in the previous quarter. The country recorded 2.4% growth last year, trailing several regional economies.

The central bank expects inflation in 2026 and 2027 to be lower than previously forecast, partly because global energy prices have eased.

Headline inflation fell to 1.95% in July, remaining within the Bank of Thailand’s 1-3% target range.

Inflation could rise until the first quarter of 2027 due to the effects of El Niño before easing again, the central bank said. The next policy meeting is scheduled for October 28, when updated economic forecasts are expected.