Thailand: Central Bank resumes rate cuts in August
Policy rate falls to lowest level since 2023: At its meeting on 13 August, the Bank of Thailand (BOT) unanimously decided to cut the policy rate by 25 basis points to 1.50%, after having stood pat in June. The current monetary policy easing cycle that began in October 2024 now totals 100 basis points, with the policy rate at its lowest level since February 2023.
BOT attempts to kickstart the economy: The Bank expects price pressures to remain subdued this year, while economic growth is set to take a hit from U.S. tariff hikes and a weaker tourism sector. As a result, the BOT is shifting to a more accommodative monetary policy stance.
More cuts by year-end: The Central Bank indicated that “monetary policy should be accommodative going forward to support the economy”. Accordingly, the majority of our panelists expect another 25 basis points cut by December. Price pressures should remain below the 1.0–3.0% target range through the end of next year, and GDP growth will feel the pinch of global trade protectionism. That said, a minority of our panel of analysts see rates remaining at their current level, as the BOT might opt to preserve some of its already limited policy space in an uncertain economic environment.
The BOT’s next policy meeting is scheduled for 8 October.
Panelist insight: United Overseas Bank’s Sathit Talaengsatya and Enrico Tanuwidjaja said:
“Given the subdued economic outlook, government bond yields, and the BOT’s and market participants’ current inflation projections, there is a growing risk of inflation expectations becoming de-anchored, potentially spilling over to wage and price-setting behaviors among firms and households. […] Therefore, we view further monetary policy easing as quite likely, not only to re-anchor inflation expectations effectively but also to stimulate broader economic activity and mitigate risks to financial stability.”