Thailand keeps policy rate unchanged at 1.5%

The Monetary Policy Committee (MPC) of the Bank of Thailand (BoT) on Wednesday announced its decision to maintain the policy rate at 1.50%, with a 5-2 vote.

Two MPC members supported a 0.25 percentage point cut to 1.25%.

Sakkapop Panyanukul, MPC Secretary, said the Thai economy is expected to grow by 2.2% in 2025 and 1.6% in 2026, broadly in line with previous projections.

Merchandise exports are starting to feel the effects of U.S. trade policies, while tourism and domestic demand have slowed but are anticipated to recover gradually.

The MPC noted that monetary policy should remain accommodative to support economic recovery. Most members emphasized the timing and effectiveness of policy given limited room to manoeuvre, leading to the decision to maintain the policy rate.

Two members favoured further accommodative measures to ensure financial conditions support economic recovery and ease the debt burden on SMEs and vulnerable households.

Headline inflation is projected to be lower than earlier estimates, mainly due to energy and raw food prices.

Core inflation is expected to remain at 0.9% in both years, with medium-term private-sector inflation expectations well anchored.

Interest rates in the banking and financial markets have declined following previous policy cuts, but overall credit remains subdued due to weaker corporate demand, debt repayments, and cautious lending to higher-risk borrowers, particularly SMEs and low-income households.

The baht has appreciated against the U.S. dollar at times, affecting some exporters. The MPC stressed the importance of monitoring credit growth and currency movements and supports targeted financial measures for vulnerable groups.