Rates slashed to jump-start economy

Central bank cuts policy rate to 1.25%

- SOMRUEDI BANCHONGDUANG NAREERAT WIRIYAPONG

The Bank of Thailand says it will continue to ease monetary policy to support economic growth after cutting the policy rate by 25 basis points (bps) yesterday.

The Monetary Policy Committee (MPC) unanimously voted to reduce the policy rate by 25 bps to 1.25%, effective immediately, to support economic momentum, according to Sakkapop Panyanukul, secretary of the MPC.

The MPC has now cut the policy rate four times during six meetings this year, lowering the rate by a total of 1 percentage point. Rate cuts were implemented in February, April, August and December, while the rate was maintained at the June and October meetings.

"The MPC assessed the Thai economic outlook as showing a clearer slowdown compared with the previous meeting," Mr Sakkapop said.

The central bank projects GDP growth of 2.2% in 2025, 1.5% in 2026 and 2.3% in 2027. Economic activity in the second half of this year weakened due to temporary factors, including a slowdown in the manufacturing sector, a decline in short-haul tourist arrivals, and flooding in the southern provinces, which is expected to have lingering effects into early next year.

Although the economy is expected to recover in 2027, growth will remain below potential, driven mainly by the services sector, while exports and manufacturing continue to face intense competition, noted the MPC.