Thailand's Central Bank Cuts Interest Rate to Boost Economic Growth
- simpleisgd
- Feb 26
- 2 min read
On February 26, 2025, Thailand’s central bank reduced its benchmark interest rate by 0.25 percentage points to 2%, in response to slower economic growth and global trade uncertainties. This follows a rate hold in December and a surprise cut in October. Six out of seven committee members voted for the reduction.
Reason for the Cut
The central bank cited weaker GDP growth projections and risks from global trade tensions. The government has been pushing for rate cuts to support the economy and weaken the baht, boosting exports. The bank emphasized that the decision was based on economic conditions, not political pressure.
Growth Outlook
Economic growth is now expected to slightly exceed 2.5% in 2025, down from a prior forecast of 2.9%. The central bank sees challenges in manufacturing and competition from imports, but domestic demand and tourism may offer support.
Inflation and Stability
Inflation is expected to stay within the target range of 1-3%, with forecasts of 1.1% for 2025. The central bank assured that the rate cut would not impact financial stability.
2025 Economic Forecast
Thailand’s economy grew by 2.5% in 2024, falling behind regional peers. Finance Minister Pichai Chunhavajira expects 3-3.5% growth in 2025, driven by stimulus and foreign investment. Economists predict gradual rate cuts, with the key rate possibly dropping to 1.5% by 2026.
In conclusion, the Bank of Thailand's decision to lower the interest rate aims to support the economy amid slower growth and global trade uncertainties. While inflation remains under control, the central bank is prepared to adjust further if needed, though it sees the current rate cut as a targeted response rather than the start of a broader easing cycle.
