The Monetary Policy Committee (MPC) meeting on 28 Oct 2026 unanimously decided to keep the policy interest rate at 1.00% per year. It views the Thai economy as growing below its potential, despite slightly raising GDP forecasts for 2026-27 due to momentum from AI trends. The committee also highlighted four key risks to monitor: geopolitical issues, oil prices, SME vulnerability, and the impact of low interest rates on stability.
Don Nakornthap, Secretary of the Monetary Policy Committee (MPC). He said the latest MPC meeting on 28 Oct 2026 unanimously agreed to maintain the policy interest rate at 1.00% per year. This decision reflects the view that monetary policy should remain accommodative, complemented by targeted financial measures to support an economic recovery that is still uneven.
Although the Thai economy benefits from technology and artificial intelligence (AI) trends, growth remains below potential and benefits are concentrated in related industries. However, economic forecasts were revised upward, with 2026 GDP projected at 2.4%, up from 2.3%, and 2027 raised to 2.1% from 1.8%.
Thailand's economic drivers remain exports and investment, but private consumption is weak due to high household debt and a more fragile labor market, reflected in rising unemployment rates. Purchasing power, especially among low-income households facing cost-of-living pressures, remains subdued.
Inflation may rise temporarily, leading to a revised forecast for general inflation in 2026 averaging 2.1%, lower than the 2.8% forecast in June 2026. For 2027, inflation is revised down to 1.3% from the previous 1.4%.
"This quarter is the first time we expect general inflation to exceed 3%, which is the Bank of Thailand’s upper bound and target, continuing into the first quarter of 2027 before declining fairly quickly," Don said.
For 2027, energy price impacts and the El Niño phenomenon are expected to subside. Inflation outlook still depends on the uncertain war situation, despite oil flow through the Hormuz Strait returning near pre-conflict levels. Monitoring energy price support measures, the pass-through of prices by businesses to core inflation, and medium-term inflation expectations is also necessary.
The MPC noted ongoing risks including continued contraction in SME lending across most sectors, with financial institutions cautious about lending to high-risk borrowers. Overall credit quality remains stable but monitoring SME and vulnerable household debt repayment capacity going forward is important.
Additionally, the MPC identified two other risks to watch: 1) developments in the Middle East conflict and geopolitics, and 2) the long-term impact of persistently low interest rates on financial and economic stability.
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