Thailand's central bank delivered a third consecutive rate hold, as subdued domestic demand and weak economic growth give policymakers room to assess the impact of the Middle East conflict.

The Bank of Thailand's monetary policy committee voted unanimously to maintain the policy rate at 1.00%, a decision predicted by all 13 economists polled by The Wall Street Journal.

Despite the energy shock from the Iran war, inflation remains manageable, allowing the central bank to prioritize economic recovery than respond to higher energy and production costs with tighter monetary policy.

The central bank struck a cautious tone, despite noting that exports and investment have benefited from the technology and artificial-intelligence cycle.

Those gains rely heavily on imported inputs and have limited spillovers to the broader economy, the BOT said, adding that overall growth remains low and uneven.

The central bank's latest projections call for the economy to expand 2.3% in 2026 and 1.8% in 2027. At its last meeting, the BOT said that headline inflation is expected to average 2.8% in 2026 and 1.4% in 2027.

However, headline inflation is expected to be lower than previously assessed, it said Wednesday, reflecting fluctuating global energy prices.

Looking ahead, the BOT said it will monitor developments in the Middle East conflict, the extent to which firms pass higher costs through to consumers and medium-term inflation expectations.

The decision comes as uncertainty around the Middle East conflict and fresh fiscal concerns about the U.S. economy have kept market expectations for interest-rates moves in flux.

While persistent inflationary pressures in some economies have strengthened the case for tighter monetary policy, Thailand's circumstances are different. Domestic demand remains weak, household debt is high and economic growth is below potential, limiting the scope for the central bank to tighten policy without putting additional pressure on the recovery.

The BOT gave few clues about its next move, saying only that the committee "views that the current policy rate is appropriate to support economic recovery," said Capital Economics' Gareth Leather in a note.

CE expects the central bank to keep rates unchanged for the remainder of the year.

"The BOT [is] likely to resume its easing cycle next year if inflation falls back as we anticipate," Leather said.