Thailand: Central Bank leaves rates unchanged in June
Central Bank pauses monetary policy easing: At its meeting on 25 June, the Bank of Thailand (BOT) decided to maintain the policy rate at 1.75%. The decision followed two consecutive 25 basis point cuts and aligned with market expectations.
BOT waiting for ideal timing to cut further: The Bank opted to stand pat as it aims to optimize the timing of rate cuts amid heightened global uncertainty and limited policy space. Nonetheless, the BOT noted that inflation remains subdued due to supply-side factors. It added that the economy is expected to slow as goods exports face headwinds from U.S. tariffs and private consumption feels the pinch of weakening income and consumer confidence.
Central Bank to reduce rates in Q3: The BOT is widely expected to resume cutting rates amid low inflation, a slowing economy and dovish forward guidance. Assistant Governor Sakkapop Panyanukul stated, “We have limited ammunition so timing is important. We need to see when will be the most effective timing to cut the rate.” Most of our panelists expect the BOT to cut rates in Q3, with the vast majority expecting a 25 basis point cut to 1.50%. For Q4, our panel is more divided, with end-2025 rate projections ranging from 1.00% to 1.75%. The Bank is scheduled to meet again on 13 August.
Panelist insight: Nomura’s Charnon Boonnuch and Euben Paracuelles commented:
“We expect the BOT to pause at the next MPC meeting in August, as we think economic indicators ahead of the MPC meeting will not be materially different from the current outlook. Nonetheless, we would not rule out the BOT cutting in August, owing to the elevated uncertainty in the global economy and domestic political development. We still expect the BOT to deliver two 25bp cuts in Q4 and add another one in Q1 2026, as we think signs of deteriorating economic conditions will be more evident to the BOT by then. This is only partly owing to the payback effects in H2 (after the export front-loading), but more importantly because of the weakening domestic demand amid the negative feedback loop, which will likely worsen further out, in our view.”