The Bank of Thailand (BoT) lowered its key interest rate by 0.25 percentage points on Wednesday, responding to mounting pressure from the government to support the slowing economy and weaken the Thai baht to boost exports.
Key Details:
The central bank‘s Monetary Policy Committee voted 6-1 to cut the one-day repurchase rate to 2%, citing clearer downside risks to economic growth.
The BoT revised its economic outlook, warning that growth would be slower than expected due to structural issues in the industrial sector, foreign competition, and rising global trade tensions, despite support from domestic demand and tourism.
The decision followed a call from the Thai cabinet on Tuesday for rate cuts to keep inflation within the 1-3% target range.
The International Monetary Fund (IMF) also recently recommended lower rates to ease borrowing costs and improve debt repayment capacity.
Thailand’s economy expanded just 2.5% in 2024, below the 2.9% consensus forecast and half the growth rate of neighboring Indonesia.
Market Reaction:
The Stock Exchange of Thailand index climbed 1.6% following the announcement, while the Thai baht remained stable at 33.7 per US dollar.
Outlook:
The rate cut signals the BoT’s shift toward a more accommodative policy, but further easing may be necessary as the government seeks to stimulate growth in the face of global economic headwinds.
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