Thai central bank cuts interest rate to 2%

The Bank of Thailand (BoT) on Wednesday cut its key interest rate by a quarter point amid government calls for further easing to support the economy and weaken the Thai baht to boost exports.

The central bank's Monetary Policy Committee voted 6-1 to reduce the one-day repurchase rate to 2% to address clearer downside risks to the economy.

On the same day, the BoT said in its statement that the Thai economy is expected to expand at a slower pace than previously estimated due to the industrial sector being pressured by structural problems and competition from foreign products, as well as higher risks from trade policies of major economies, even though the economy is supported by domestic demand and tourism.

Thai shares jumped on the news, with the Stock Exchange of Thailand index up 1.6% from the previous day at midafternoon. The baht was little changed at around 33.7 to the US dollar.

The interest rate cut decision followed a call on Tuesday by the Thai cabinet for a rate reduction to help ensure inflation stays within the targeted range of 1-3%.

The International Monetary Fund also said last week that a lower interest rate was needed to reduce borrowing costs and improve the capacity of borrowers to repay debts.

Data released last week showed that the economy grew just 2.5% in 2024, below the consensus forecast of 2.9% and at half the pace of neighbouring Indonesia.