Economists Divided on Bank of Thailand’s Policy Rate Outlook
Following a recent reduction in the reciprocal tariff rate imposed by the US on Thai exports, a significant debate has emerged among economists regarding the Bank of Thailand’s (BoT) upcoming policy rate decision. Analysts from CIMB Thai Bank and the SCB Economic Intelligence Center (EIC) both anticipate that the Monetary Policy Committee will implement a 25 basis point rate cut. Their shared reasoning is based on persistent weak economic indicators and an inflation rate that has remained below the central bank’s official target, which they believe justifies a lower policy rate to stimulate and support the overall economy in the current climate.
Differing Views and Economic Forecasts
In stark contrast, the Kasikorn Research Center (K-Research) holds the view that the central bank will choose to keep the policy rate unchanged at 1.75%. This perspective is grounded in the fact that the BoT has already lowered the rate by 50 basis points earlier this year. K-Research also posits that the recent reduction in US tariffs will be a positive factor, helping to maintain export momentum and provide a natural boost to the economy. Reflecting this optimistic outlook, the research center has even revised its 2025 GDP growth forecast upwards, from 1.4% to 1.5%, signaling a belief that the economy has sufficient support from external factors without the need for further rate cuts at this time.
Persistent Challenges and Future Policy Expectations
Despite the positive news of the tariff reduction, all three research units are in agreement that the Thai economy will continue to face a variety of challenges and uncertainties during the second half of the year. These lingering headwinds include ongoing ambiguity surrounding future US tariffs, the potential for a decline in foreign tourist arrivals, and broader geopolitical tensions that could impact global trade. Both EIC and K-Research ultimately predict that the central bank will likely implement further rate cuts later in the year, as a necessary measure to provide additional stimulus and stability to the economy in the face of these persistent and unpredictable risks.
