BANGKOK: Thailand on Wednesday cut its policy rate, for third time this year, to a fresh record low to halt economic fallout caused by Covid-19.
The Bank of Thailand’s Monetary Policy Committee (MPC) voted 4-3 to lower the policy rate by 25 basis points from 0.75% to 0.5%, effective today.
In a statement, MPC secretary Titanun Mallikamas said the country’s economy is expected to contract deeper this year due to global economic contraction.
“Most members viewed that a more accommodative monetary policy will alleviate the negative impacts, as well as reinforce the previously announced fiscal, financial and credit measures.
“Nevertheless, three members voted to maintain the policy rate at the meeting (today), focusing on expediting the effectiveness of the announced financial and credit measures,” he said.
Thailand’s economy, which is heavily reliant on tourism and trade, has been hit hard by the Covid-19 pandemic.
The government imposed a ban on passenger flights starting April 4 and it has extended this until end of June to contain the spread of the deadly virus in the kingdom.
On Monday, Thailand’s Gross Domestic Product (GDP) shrank by 1.8% in the first quarter from a year ago.
It was the deepest contraction since the fourth quarter of 2011 when there was flooding in the country.
On Monday, the National Economic and Social Development Council (NESDC) also slashed its forecast for 2020 GDP to a contraction of 5% to 6% from growth of 1.5% to 2.5% projected in February.
NESDC secretary-general Thosaporn Sirisamphand said Thailand’s economy would be hit hardest in the second quarter as major businesses and venues were closed to curb the Covid-19 spread.