Thailand: Bank of Thailand leaves rates unchanged in June
Unanimous decision in line with expectations: At its meeting on 24 June, the Bank of Thailand (BOT) decided to maintain its 1-day repurchase rate at 1.00%, extending April’s pause. The decision was unanimous and in line with market expectations.
Bank maintains inflation outlook, raises economic outlook: The BOT expects inflation to exceed its 1–3% target during the remainder of 2026 and to gradually decline in 2027, with the Bank keeping its full-year inflation forecasts unchanged from its prior assessment. The Bank also deemed that inflation expectations remain anchored within target.
The BOT raised its GDP growth forecast for 2026 following extra emergency borrowing recently approved by the government to reduce living costs. Still, the Bank stated that economic momentum was projected to be “low and uneven” amid the weak competitiveness of SMEs and structural hurdles to private consumption.
Rates unlikely to change this year: In a subsequent statement in early July, the BOT stated that interest rates would rise when the economy returns to its potential growth rate, which the Bank evaluated at 2.7%—a figure notably above our Consensus for this year and next.
The vast majority of our panelists see the BOT’s policy rate ending 2026 at current levels. Price shocks from the Iran war will leave little room for rate cuts in the near term, while below-potential GDP growth during the remainder of 2026 will rule out rate hikes. Still, a small number of panelists have penciled in a hike by December.
The BOT should reconvene on 26 August.
Panelist insight: United Overseas Bank’s Enrico Tanuwidjaja and Sathit Talaengsatya said:
“We maintain our view that 1.00% is the terminal rate for this cycle and expect the BOT to remain on hold throughout the rest of 2026 and throughout 2027. Persistent economic slack, weak demand-driven inflation, household and SME balance-sheet repair, and impaired bank-credit transmission should offset the temporary headline inflation shock.”
ANZ’s Kausani Basak and Jennifer Kusuma commented:
“We maintain our call for a 25bp rate hike each in Q3 and Q4 2026. We see the balance of risks favouring higher rates to anchor inflation expectations. Improving growth momentum, supported by fiscal policy, as well as the need to rebuild policy space and the Fed’s hawkish pivot in June, further strengthen the case for tightening. The risk to our call is that inflation undershoots our expectations on the back of faster-than-expected decline in oil prices or if external shocks open fresh downside risks to the growth outlook.”