Thailand Cuts Rates to 1.75% as Tariffs and Tourism Slowdown Hit Economic Outlook
- simpleisgd
- Apr 30
- 2 min read
The Bank of Thailand (BoT) has cut its benchmark interest rate by 25 basis points to 1.75%, marking the lowest level in two years. The move, announced on April 30, 2025, underscores the growing urgency to support an economy weighed down by falling exports, weaker-than-expected tourism recovery, and the ripple effects of intensifying global trade tensions.
Why the Rate Cut?
The Monetary Policy Committee voted 5–2 in favor of the cut, citing softening domestic demand and rising external risks. Most notably, the recent 36% U.S. tariff imposed on Thai exports has significantly clouded the country’s trade outlook. Combined with lower tourist arrivals and a stronger baht, Thailand's growth momentum is facing broad-based pressure.
Revised Forecasts Paint a Cautious Picture
The BoT has downgraded its 2025 GDP growth forecast to 2.0% from 2.5%, warning that growth could dip further to 1.3% if global trade tensions continue to escalate. Headline inflation is also expected to fall to 0.5%, below the bank’s target range of 1%–3%, driven by lower global energy prices and government subsidies.
In tourism, one of the country's key revenue generators, the BoT has cut its forecast for international visitors to 37.5 million, down from a previous estimate of 39.5 million. Exports, another major growth engine, are now expected to rise just 0.8% this year, compared to an earlier projection of 2.7%.
Other Factors Behind the Decision
The central bank highlighted several domestic and international developments that influenced its decision:
A 7.7-magnitude earthquake in March disrupted business activity and infrastructure in northern provinces.
Soft global demand and tighter financial conditions globally are weighing on private sector sentiment.
Ongoing trade policy uncertainty from the U.S., especially the recent round of tariffs, has affected export and investment decisions.
What Comes Next?
Although the BoT maintains that monetary policy still has room for further easing, the central bank is proceeding with caution. Policymakers emphasized the importance of monitoring external conditions, particularly global trade and financial markets. They also called for structural reforms and targeted fiscal support to complement monetary policy in stabilizing the economy.
The BoT's next policy meeting is scheduled for June 25, where further action will be considered based on updated economic data.
