• Q3 GDP set to register first quarterly fall in more than 2 years
• Bank of Thailand ready to adjust policies when needed
• Next monetary policy review set for December

BANGKOK, Oct 22 (Reuters) - Thailand's central bank will maintain its accommodative monetary stance to support the economy and remains ready to adjust policy settings as needed, officials said on Wednesday, amid expectations that GDP had fallen in the third quarter.

Monetary policy is not an obstacle to economic growth, Deputy Governor Piti Disyatat told a policy forum, adding that the economy needed further fiscal and monetary support.

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The central bank projects annual growth at 1.5% in the third quarter and 1.3% in the fourth quarter.

On a quarterly basis, it expects the economy to register a 0.5% dip in the third quarter followed by only modest growth of 0.5% in the final three months of the year.

Despite the expected contraction, the first in 11 quarters, senior director Pranee Sutthasri said, "It's not a sign of danger for the economy."

THIRD QUARTER DECLINE CAUSED BY FACTORY CLOSURES

The decline was caused by temporary factory closures and production halts aimed at improving efficiency, a situation that also occurred during the pandemic, she said.

The economy in the final quarter will be helped by factories reopening and the government's stimulus measures, she said.

The central bank expect headline inflation to turn positive in the second quarter of 2026 and return to the target range of 1% to 3% in early 2027, with low risk of deflation.

"If deflationary risks begin to emerge, monetary policy will need to change," said Assistant Governor Sakkapop Panyanukul.

RATE CUTS STILL FEEDING INTO ECONOMY

Earlier this month, the central bank unexpectedly left the one-day repurchase rate unchanged (THCBIR=ECI) , opens new tab at 1.50%.

The committee said policy should remain accommodative and noted that the impact of earlier rate cuts was still feeding through to the economy, according to minutes , opens new tab of the meeting.

The central bank has cut its key rate four times over the past year to support Southeast Asia's second-largest economy, which is grappling with U.S. tariffs, high household debt, and a strong baht .

The central bank said it would ensure the baht moves more in line with economic fundamentals.

The bank expects GDP growth to reach 2.2% for the whole of this year and 1.6% next year. Last year's growth of 2.5% lagged peers.

Governor Vitai Ratanakorn, who took office at the start of October, has said interest rates could be cut if needed to lift inflation and growth.

The next policy review is on December 17, and some economists expect a further rate reduction.

https://www.reuters.com/world/asia-pacific/thailand-monetary-policy-should-remain-accommodative-central-bank-minutes-show-2025-10-22/