BoT Eyes Interest Rate Cut in Formula for Economic Revival

[webfact]

Picture courtesy: Thai Rath

 

Thailand’s financial landscape is poised for a significant shift as the Bank of Thailand (BoT) is anticipated to reduce interest rates tomorrow, April 30. The expected decision comes amidst a climate of economic uncertainty, driven by international tariff tensions and a slump in tourism numbers from pivotal countries like China and South Korea.

 

Experts at Kasikorn Research Center (K-Research) expect the Monetary Policy Committee (MPC) to lower the current policy rate from 2% to 1.75%.

 

This move aims to stabilize an economy currently under strain, and address not only international pressures, such as US tariff hikes and flagging global demand, but domestic issues, including the aftermath of the recent earthquake and decreased consumer spending. K-Research anticipates further rate reductions in the latter half of the year to further buttress the economy.

 

While a rate cut seems imminent, BoT officials emphasize restraint in policy adjustments. The MPC aims to preserve flexibility to handle potential future economic disruptions. Observers note that the committee will monitor new government initiatives to stimulate growth, minimizing over-reliance on monetary policy alone.

 

 

 

The SCB Economic Intelligence Center (EIC) foresees three rate cuts this year, targeting a benchmark rate of 1.25% by the end of 2025, aligning with predictions reported by the Bangkok Post. The EIC highlights the necessity of deeper cuts to protect Thailand from the ongoing US trade tensions and tightening global financial climates.

 

Notably, if the rate cut proceeds this week, Thailand would see borrowing costs drop below those observed during the 2018–19 US-China trade disputes. Analysts at CIMB Thai Bank’s research centre predict further relaxation of rates could see them fall to 1% if economic conditions deteriorate.

 

However, they caution that inflation, spurred by tariffs, might force the BoT to reconsider its approach, possibly pivoting to direct interventions like debt relief and liquidity support.

 

Amidst these developments, the focus may expand from monetary policy alone to include broader fiscal measures. Such strategies could play a crucial role in maintaining Thailand's economic stability amid rising fears of a liquidity trap and stalling credit growth.

 

 

  Adapted by ASEAN Now from The Thaiger 2025-04-29

 

 

[fulhamster]

A rate cut usually means the currency weakens.

Never seems to apply to Thailand

[kiwikeith]

On 4/30/2025 at 5:40 PM, fulhamster said:

A rate cut usually means the currency weakens.

Never seems to apply to Thailand

 

On 4/30/2025 at 5:40 PM, fulhamster said:

A rate cut usually means the currency weakens.

Never seems to apply to Thailand

Borrowing rates to fall to one %, house mortgages are about 5.5% does this mean they will drop to 4.5% or what borrowing are they talking about.

And yes the currency would normally devalue but this probably wont or never happens in Thailand as they want to milk incoming tourists.

And keep import costs down.