- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 1.5%
The Bank of Thailand’s Monetary Policy Committee kept its policy rate unchanged at 1.50 % on 8 October, with a 5–2 majority judging that the existing degree of accommodation remains appropriate as previous reductions are still filtering through to an economy facing a cooling in tourism and domestic demand and a slowdown in exports owing to U.S. trade measures, while headline inflation has fallen further on lower energy and raw-food costs without yet signalling broad-based deflation. After cumulative easing of 75 bp since February 2025, which brought the rate down from 2.25 % to 1.50 % through cuts in February, April and August, the committee weighed its limited policy space and the need for effective timing; two members nonetheless favoured a further 25 bp cut to bolster activity and ease debt burdens. Market and deposit rates have continued to decline, but overall credit is still contracting and loan quality among SMEs and vulnerable households is deteriorating. The Bank projects GDP growth of 2.2 % in 2025 and 1.6 % in 2026, while headline inflation is seen at 0.0 % and 0.5 %, returning to the target range only by early 2027; core inflation is pegged at 0.9 % in both years and expectations remain anchored. The baht has intermittently appreciated against the USD, weighing on some exporters, and the committee will monitor exchange-rate moves alongside credit trends. It also flags risks from U.S. tariffs, budget execution and global commodity prices, and reiterates its readiness to adjust policy as the economic and inflation outlook evolves.
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.