Thailand’s central bank holds interest rate at 1.50% amid economic concerns

Investing.com -- Thailand’s central bank kept its key interest rate unchanged at 1.50% on Wednesday, with policymakers citing concerns over the economy and the need to maintain accommodative monetary policy.

The Bank of Thailand’s Monetary Policy Committee voted 5-2 to maintain the rate, with two members voting for a 0.25 percentage point cut to 1.25%, according to a statement from the bank.

The Thai economy is projected to grow by 2.2% in 2025 and 1.6% in 2026, with the committee noting that merchandise exports have begun feeling the impact of U.S. trade policies. Tourism and domestic demand have slowed but are expected to gradually recover.

Headline inflation forecasts were revised downward, with the bank now projecting 0.0% inflation in 2025 and 0.5% in 2026. The central bank expects inflation to gradually return to its target range by early 2027.

"The lower inflation is primarily driven by supply-side factors, including declines in global crude prices, government measures to reduce domestic retail oil prices, and lower raw food prices," the bank stated.

Most committee members emphasized the importance of timing and effectiveness of monetary policy given limited policy space. The two dissenting members argued that further accommodation was needed to ensure financial conditions remain conducive to economic recovery.

The central bank noted that overall credit growth remains contracted due to weakened demand from large corporations amid economic uncertainty, debt repayments, and cautious lending to high-risk borrowers, particularly SMEs and low-income households.

The committee said it will closely monitor credit growth, baht movements, and macro-financial developments, standing ready to adjust monetary policy in response to evolving economic conditions.

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