The Bank of Thailand (BoT) views that an increase in the policy interest rate is unlikely to pressure commercial banks to immediately adjust their interest rates, as liquidity remains abundant. The monetary policy must weigh four key factors: inflation rate, strength of economic growth, stability of the financial system, and the ability to implement future policies.

          On November 23, 2018, Mr. Veerathai Santiprabhob, Governor of the Bank of Thailand, stated that if the BoT were to raise the policy interest rate, it would not necessarily pressure commercial banks to hastily increase their lending rates, particularly for loans, as the current liquidity in the banking system is still relatively high. Furthermore, during periods of rising interest rates, commercial banks can already achieve better profits.
 
          Although the BoT has not yet raised the policy interest rate, bond market interest rates have already increased somewhat, aligning with the rising interest rates in global money and capital markets. As bond market interest rates rise, commercial banks will compete to lend to large customers by significantly lowering interest rates for them, which is evident as some large clients are returning to borrow more from banks.

          In the latest meeting of the Monetary Policy Committee (MPC), although three members advocated for an interest rate hike, four members preferred to maintain the current rate. However, all members agreed that a relaxed monetary policy remains necessary for Thailand. The prolonged period of low interest rates, especially at very low levels, could create vulnerabilities and have side effects on the Thai financial system. Therefore, the BoT's policy decision-making approach remains data-dependent, requiring a thorough assessment of the situation, context, and various data for each policy decision.

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