- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 1%
The Bank of Thailand’s Monetary Policy Committee unanimously held the policy rate at 1.00%, judging the accommodative stance and targeted financial measures appropriate to support a recovery that remains weak and uneven while inflation is expected to rise temporarily. Over the past year, the rate was held at 1.50% in October 2025, cut by 25 basis points to 1.25% in December and by another 25 basis points to 1.00% in February 2026, and held thereafter. Growth in 2026 and 2027 is expected to remain close to previous estimates, supported by technology and artificial intelligence-related exports and investment, although these activities are import-intensive and provide limited broader benefits. Headline inflation was revised lower due to global energy prices but is projected to rise through the first quarter of 2027 on El Niño and gradual cost pass-through before returning to low levels, while medium-term expectations remain anchored within the target range. Overall credit expanded, led by large businesses, but small and medium-sized enterprise lending continued to contract and vulnerable borrowers’ debt-servicing capacity requires monitoring. The baht was volatile against the USD amid the Middle East conflict and changing expectations for U.S. Federal Reserve policy. The committee will monitor the conflict, international trade barriers and inflation risks, while viewing the current rate as appropriate for the recovery.
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.