1 week Ago
The Bank of Thailand (BoT) is expected to slash its policy rate by 0.25 percentage points on Wednesday, amid slower economic growth primarily impacted by the US's tariff policies. Kasikorn Research Center (K-Research) forecasts that the central bank’s Monetary Policy Committee (MPC) will lower the policy rate by a quarter point at its meeting on Wednesday, bringing it down from 2% to 1.
75%. This outlook is based on increasing economic headwinds facing the Thai economy for the remainder of the year. Key risks include the earthquake that struck in late March, coupled with escalating economic pressures from Washington's tariff hikes, the global economic slowdown, weaker than expected tourist arrivals from China and South Korea, and a loss of domestic economic momentum.
"Given the prevailing headwinds, we expect the Bank of Thailand will cut the policy rate at least once more in the second half of the year," K-Research noted. "This would be in line with the outlook for a significant slowdown in the Thai economy in the remainder of the year, primarily pressured by ongoing US tariff uncertainties,” said the research house. However, the timing of further rate cuts will largely depend on future economic data, as the MPC has emphasised that the current move does not signal the beginning of an interest rate downcycle.
The MPC also appears keen to preserve monetary policy space to manage potential future uncertainties. In addition, the central bank will closely monitor any new fiscal stimulus measures from the government, which could offer further support to the economy. SCB Economic Intelligence Center (EIC), the research arm of Siam Commercial Bank (SCB), expects the regulator to lower the policy rate three times this year, reaching 1.
25% by the end of 2025. According to EIC, the rate cuts would help support the economy amid rising uncertainties, particularly from US trade measures and ongoing global financial tightening. "There is a high probability that the central bank will cut the policy rate by 0.
25 percentage points at its meeting on Wednesday," EIC said. Should the central bank proceed with the expected rate cut, the year-end policy rate would fall below the levels seen during 2018-19, when Thailand weathered the US-China trade war (Trade War 1.0) with a less direct impact.
Separately, the research centre of CIMB Thai Bank (CIMBT) projects that the central bank will continue lowering rates at tomorrow’s MPC meeting, following a cut made in February. The policy rate is forecast to reach 1.25% this year.
If the economy weakens further, the rate could be reduced to as low as 1% by year-end, it said. However, if tariff-driven pressures persist and inflation accelerates, the central bank may instead opt for targeted measures — such as small and medium enterprises' debt relief and liquidity injections — rather than relying solely on rate cuts. Meanwhile, fiscal policy is expected to take on a larger role in supporting the economy, amid concerns over weak credit growth and the risk of a liquidity trap, particularly if business and consumer confidence fail to recover, CIMBT's research centre added.
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