- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 1%
The Bank of Thailand’s Monetary Policy Committee (MPC) unanimously held the policy rate at 1.00%, judging that an accommodative stance remained appropriate to support below-potential, uneven growth despite a temporary supply-driven rise in inflation. The rate had fallen from 1.50% following 25-basis-point cuts in December 2025 and February 2026. Headline inflation is projected to average 2.1% in 2026 and 1.3% in 2027, rising into early 2027 because of energy prices and El Niño before returning to low levels as base effects and weak domestic demand weigh. Medium-term inflation expectations remain anchored within the target range. Economic growth is projected at 2.4% in 2026 and 2.1% in 2027, supported by merchandise exports and private investment linked to the technology and artificial intelligence cycle, although the benefits remain concentrated. Overall credit growth has picked up, driven by large corporate loans, while lending to small and medium-sized enterprises continues to contract. The baht depreciated against the USD as market expectations shifted toward a more restrictive U.S. monetary policy outlook. Higher oil prices amid uncertainty surrounding the Middle East conflict are adding inflation and exchange-rate pressures. The MPC will monitor inflation risks, including firms’ cost pass-through and limited energy-subsidy capacity, alongside the effects of low interest rates on long-term macro-financial stability.
Rate evolution
From June 2025 to October 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, August and October. 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 held the policy rate at 1.00%, describing it as sufficiently accommodative as the Middle East war lifted business costs and inflation while slowing growth, and maintained it on 24 June as growth was stronger than previously assessed but remained low and uneven, supply-side cost pass-through was expected to lift inflation before it eased, and medium-term inflation expectations remained anchored. 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. On 28 October 2026, it again unanimously held the policy rate at 1.00%, judging the setting appropriate to support recovery as growth remained below potential and its benefits concentrated, while flagging heightened inflation risks from oil prices and El Niño that could intensify cost pass-through.