The Bank of Thailand will keep its base rate on hold through 2022 as the economic outlook worsens due to recent cases of COVID-19 ravaging the country, according to Fitch.

Last 4 August, the Bank of Thailand announced its decision to maintain its base rate at 0.50%, a stance it has upheld since May 2020. The Monetary Policy Committee voted 4 to 2 on the decision, with two members advocating for a further 25 base points reduction to 0.25%.

In a statement released by the Bank of Thailand, it noted, "The committee viewed that risks to the economic outlook remained and support must be provided by accelerating the distribution of liquidity and reducing the debt burden for those affected. Most members viewed that financial measures would be more effective than a further reduction in the policy rate which was already low. Most members thus voted to maintain the policy rate. Nevertheless, two members voted to cut the policy rate to support other measures in shoring up the economy and mitigate heightened risks in the period ahead," the central bank explained.

Fitch highlighted that the resurgence of COVID-19 and Thailand's slow vaccination rate - with just 5.7% of the population fully vaccinated as of August 2 - suggests that the country's economic recovery may not truly begin until 2022.

"Given the loss of output in 2020 and the delays to the economic recovery, we believe the Bank of Thailand will see ample room to keep its base rate on hold through 2022 as well. Indeed, we believe the Bank of Thailand will look past the US Fed's hawkish turn in June and tie its monetary policy to the recovery of the Thai economy," Fitch commented.

Fitch mentioned it will be revising the country's economic growth outlook from 3% as soon as Thailand releases its second quarter 2021 gross domestic product figures on 17 August.