Thailand May Keep Its Historic Low Policy Rate throughout 2022 as Economic Recovery Still Fragile

Thailand may keep its historic low benchmark interest rate throughout 2022 as headline inflation has risen to its highest level since October 2008, and the impact of the ongoing Ukraine crisis on oil prices is likely to push this further, said the Krungsri Research Center on Tuesday.


Consumer price index increased 5.28 percent year over year in February, the highest level in 13 years and higher than economists’ forecast of 4.05 percent. Excluding fresh foods and energy, inflation rose 1.80 percent.

A surge in energy prices is the main reason for higher inflation in February, says the Ministry of Finance last Friday. Products in the energy segment rose 29.22 percent during the month, compared to a 19.22 percent rise in February 2021.


According to the Krungsri Research Center, inflationary pressures tend to elevate faster than projected, owing to rising commodity costs, with energy prices being particularly hard hit by the tensions in Eastern Europe.  This is then adding to the headwinds blowing against the Thai economy. 

Furthermore, daily COVID-19 infections have surpassed 20,000, which may erode consumer and domestic tourist confidence. The center therefore forecasts that policy rates will continue at their record low of 0.50 percent through 2022 to support what remains a weak and fragile recovery.