Thailand's current policy interest rate settings were robust and can handle future risks to the economy, the central bank said on Wednesday, amid continued pressure from the government to lower borrowing costs and help jumpstart sluggish growth.
Cutting rates could help lower debt in the short run but could also induce risks in the longer term, the Bank of Thailand (BoT) said, adding that by holding rates steady at 2.50% it created "policy optionality".
The country's economy was still challenged by structural pressures while inflation remained low due to government measures and supply side factors, the BoT said.
After the fiscal budget was passed, government expenditure will help support the economy, BoT senior director Pranee Sutthasri said.
Overall economic conditions were stable with loans expanding, but small businesses and households faced tighter credit conditions.
The BoT left its key interest rate unchanged for a third straight meeting on April 10.
Prime Minister Srettha Thavisin, also the finance minister, has repeatedly urged the central bank to deliver a rate cut, saying the current level is hurting businesses and investor sentiment and that the economy is in "crisis".
BoT governor Sethaput Suthiwartnarueput has openly disagreed with Mr Srettha's depiction of the economy as being in crisis, saying it was in need of structural reforms.
On Tuesday, Mr Srettha said he has urged the country’s four biggest commercial banks to reduce loan interest rates for vulnerable groups and small businesses after the BoT repeatedly ignored his calls to lower borrowing cost from a decade-high.