- Decision
- Lower
- Rate change
- 25 bps
- policy rate
- 1.5%
The Bank of Thailand’s Monetary Policy Committee (MPC) unanimously cut the policy rate by 25 bp to 1.50 percent, effective immediately, citing subdued headline inflation, a looming second-half growth slowdown as U.S. trade policies erode export competitiveness and tourism, and rising vulnerabilities among SMEs and households. After two 25 bp reductions in February and April and a pause in June, the easing cycle resumes. Headline inflation remains low as favourable weather depresses food prices and global crude oil declines curb energy costs, while core inflation is broadly stable; credit growth is still negative and loan quality, especially for SMEs and housing, continues to worsen. Externally, the baht has appreciated against regional currencies and Thai government bond yields have fallen, developments the MPC will monitor for their impact on activity amid heightened uncertainty from U.S. trade measures. The committee reiterated that monetary policy should stay accommodative to buttress growth but emphasised vigilance over credit dynamics, exchange-rate movements and overall macro-financial stability given limited policy space.
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.