[BANGKOK] Thailand’s central bank lowered its key interest rate by a quarter point on Wednesday (Aug 13), its fourth cut in 10 months as it looks to support a sluggish economy grappling with negative inflation and the impact of US tariffs.
The Bank of Thailand’s (BOT) monetary policy committee unanimously voted to reduce the one-day repurchase rate by 25 basis points to 1.50 per cent, the lowest in more than two years.
The BOT had held the key rate at its June meeting following back-to-back cuts at reviews in February and April. It had also cut rates in October last year. Twenty-three of 28 economists in a Reuters poll had predicted a quarter-point reduction this week. The other five had expected no rate change.
The central bank in a statement said the Thai economy was expected to expand this year and next close to earlier assessments, but US trade policies would exacerbate structural problems and weaken competitiveness, with small businesses vulnerable.
“The committee views that monetary policy should be accommodative going forward to support the economy,” the statement said.
It expects growth in South-east Asia’s second-largest economy to slow in the second half of the year, it said.
A NEWSLETTER FOR YOU
Friday, 8.30 am
Asean Business
Business insights centering on South-east Asia’s fast-growing economies.
The baht reversed course to fall 0.1 per cent after the announcement, while Thai stocks were largely unchanged.
The economy has struggled with weak consumption, high household debt, slowing tourism, trade uncertainty and US tariffs.
The central bank has said the economy might have grown about 3 per cent annually in the second quarter of 2025 but would feel the impact of US tariffs and weakening consumption later this year.
Wednesday’s meeting was the last for governor Sethaput Suthiwartnarueput. New governor Vitai Ratanakorn will take over on Oct 1, and he has said rate cuts will support growth.
The next policy review will be on Oct 8. In June, the BOT predicted 2025 economic growth of 2.3 per cent, with export growth of 4 per cent, after factoring in US tariff rates of 18 per cent.
The economy expanded 2.5 per cent last year, lagging peers. Last month, the US reduced its tariff rate to 19 per cent on imported goods from Thailand, down from the initial 36 per cent level and more aligned with other countries in the region.
There are still uncertainties relating to US tariffs on transshipments via Thailand from third countries. REUTERS
