BANGKOK (Reuters) -Thailand's policy interest rate is at an adequate level to address economic risks as the recovery is uneven and financial conditions have tightened, minutes of the Bank of Thailand's Oct. 16 monetary policy meeting showed on Wednesday.
At the meeting, the monetary policy committee unexpectedly voted 5-2 to cut the one-day repurchase rate by 25 basis points to 2.25%, the first decrease since 2020. Two members voted to keep the rate steady.
The rate cut was expected to mitigate the risk that tighter financial conditions might hurt the economy by helping household debt deleveraging and reducing overall debt burdens, according to the minutes released by the Bank of Thailand (BOT).
"The current policy rate remained adequate to address risks to the outlook for the economy, inflation, and financial stability," the minutes said.
The committee said there was gradual progress in household debt deleveraging. Thailand's household debt-to-GDP ratio was 89.6% at the end of the second quarter, or debt of 16.3 trillion baht ($483 billion), among the highest levels in Asia.
The committee decided the policy rate should remain neutral and consistent with economic potential, and it should not be so low that financial imbalances would build up in the long term, the BOT had said after the meeting.
The next rate review is on Dec. 18.
The economy will be driven by domestic demand and tourism, the BOT said in a paper prepared for a policy forum that was set to start soon after the release of the minutes.
At the Oct. 16 meeting, the BOT raised its 2024 GDP growth forecast to 2.7 from 2.6% but trimmed its 2025 outlook to 2.9% from 3.0%. Last year's expansion of 1.9% lagged regional peers.
($1 = 33.7300 baht)