Thailand’s central bank unexpectedly cut its policy interest rate on Wednesday, February 25, lowering the one-day repurchase rate by 25 basis points to 1.00 percent. The Bank of Thailand’s monetary policy committee voted 4-2 in favour of the reduction at its first review of the year. The baht pared gains after the announcement but remains up about 1.3 percent against the US dollar so far this year, while Thailand’s main stock market extended gains to rise 1.8 percent on the day.
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Only six of 27 economists in a Reuters poll had forecast a quarter-point cut at this week’s meeting, with the rest predicting no change. Wednesday’s decision marked the sixth rate reduction since October 2024. The rate was also lowered at the previous review in December.
The central bank said economic growth is projected to remain below potential in 2026 and 2027 and uneven across sectors, reflecting structural impediments and intensified competition. On Tuesday, BOT Governor Vitai Ratanakorn said fiscal and monetary policy should be deployed to lift growth towards potential at 2.7 percent this year. Current expectations are for 1.9 percent expansion, compared with a December forecast of 1.5 percent growth, while the economy grew 2.4 percent last year.
Thailand’s economy, Southeast Asia’s second-largest, has lagged regional peers since the pandemic and faces challenges including US tariffs, high household debt and the strength of the baht. The currency’s gains this year add to a 9 percent rise against the dollar last year, which the central bank said has tightened financial conditions for exporters, particularly those facing intense price competition and low profit margins.
Thainewsroom reported that uncertainty over US trade policy remains a key concern. US President Donald Trump said he will set global tariffs at 15 percent after the Supreme Court struck down his tariff regime, below the 19 percent rate previously levied on Thailand. The central bank said it is necessary to monitor uncertainties surrounding US tariff measures, the 2027 budget delay, and the adjustment of SMEs facing heightened competition, limited access to credit and the stronger baht.mThe Bank of Thailand’s next interest rate meeting is scheduled for April 29.
Key Takeaways
• The Bank of Thailand cut its policy rate by 25 basis points to 1.00 percent in a 4-2 vote.
• Growth is forecast below potential, with 2026 expansion expected at 1.9 percent against a 2.7 percent potential rate.
• US tariff uncertainty and a strong baht remain major risks to exporters and overall economic performance.
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Adapted by ASEAN Now Thainewsroom 26 Feb 2026
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