BANGKOK, April 29 (Xinhua) -- Thailand's central bank kept its key interest rate unchanged on Wednesday as policymakers seek to support a slowing economy and navigate heightened uncertainty linked to the Middle East conflict.

The Bank of Thailand's Monetary Policy Committee (MPC) voted 6-0 to maintain the policy rate at 1 percent following a cut at its February review, retaining borrowing costs at their lowest level since September 2022.

The Thai economic expansion is projected to moderate as a result of tensions in the Middle East, which has a direct impact on growth by raising business costs and reducing household purchasing power, the central bank said in a statement.

Private consumption is pressured by rising cost of living and a weakening income outlook, while the vital tourism sector faces a potential drop in foreign arrivals due to travel constraints and higher costs, said Don Nakornthab, secretary of the MPC.

However, strong global demand for technology products would drive merchandise exports and maintain a favorable growth trajectory, Don told a news conference.

Headline inflation is forecast to average 2.9 percent this year, rebounding from a 0.5 percent decline in the first quarter, mainly driven by rising global energy prices and cost pass-through, Don said.

He added that while inflation is expected to rise in 2026 and stay above the target range temporarily, it is projected to fall to 1.5 percent in 2027 as supply-side pressures gradually ease.

The committee noted that high uncertainty clouds the economic outlook, necessitating an assessment of downside risks from a prolonged war and supply disruptions, which could significantly impact manufacturing and employment. ■