- Decision
- Lower
- Rate change
- 25 bps
- policy rate
- 1.75%
Bank of Thailand’s Monetary Policy Committee voted 5–2 on 30 April 2025 to cut the policy rate by 25 bp to 1.75 %, citing a worsening growth outlook, subdued headline inflation projected to fall below the target range, and persistently tight financial conditions amid escalating global trade-policy uncertainty and softer tourism. Following a 25 bp reduction in February, the policy rate has fallen by 50 bp so far in 2025. The cut takes effect immediately; the Committee said it aims to better align overall financial conditions with the shifting economic and price outlook. It now sees 2025 GDP growth at about 2 % under a baseline of steady U.S. tariffs and nearer 1.3 % if trade tensions intensify, while core inflation remains stable and expectations stay anchored. Loan growth and credit quality are deteriorating, particularly in housing and business segments, and the MPC warned that trade-related shocks could heighten macro-financial risks. Rising global market volatility linked to major economies’ trade policies has lifted swings in Thai financial markets, prompting the MPC to keep a close watch on baht movements. The Committee pledged to continue assessing incoming data and adjust monetary policy as needed to support price stability, sustainable growth and financial stability.
Rate evolution
From June 2025 to August 2026, the Bank of Thailand cut the policy rate by 75 basis points from 1.75% to 1.00%, with an initial hold, a cut in August, a pause in October, further easing in December and February, and then holds in April, June and August. Early in the period, the Monetary Policy Committee judged policy should stay accommodative as growth was set to slow after a stronger first half, with U.S. trade policies, geopolitics and weaker tourism and domestic demand weighing on the outlook, while headline inflation stayed subdued because of energy and food prices, credit kept contracting, and small and medium-sized enterprise (SME) and low-income borrowers faced tighter access and worsening credit quality. Even so, repeated references to high uncertainty, ongoing transmission of earlier cuts and limited policy space argued for caution at the hold decisions, while the easing steps were aimed at keeping financial conditions supportive, easing debt burdens and, by February, anchoring medium-term inflation expectations as downside inflation risks increased alongside baht appreciation and below-potential growth.
In April, the Committee described 1.00% as sufficiently accommodative and held it there as the Middle East war lifted business costs and inflation through supply-side channels while slowing growth, stressing that uncertainty was high and that inflation risks had shifted upward but were not expected to be broad-based or persistent under weak demand. At its 24 June meeting, it again held the policy rate at 1.00%, judging the setting appropriate to support recovery as growth was stronger than previously assessed but remained low and uneven, inflation was expected to rise on supply-side cost pass-through before easing, and medium-term inflation expectations remained anchored, while overall credit growth stayed subdued and SME and vulnerable household loan quality still needed monitoring. On 26 August, the Committee unanimously maintained the policy rate at 1.00%, judging that accommodative policy alongside targeted financial measures supported the recovery as the technology and artificial intelligence cycle sustained economic momentum, though growth remained low and uneven, inflation was below earlier estimates, and SME lending continued to contract despite an expansion in overall credit.