The Bank of Thailand’s Monetary Policy Committee (MPC) opted to hold its benchmark interest rate at 1.75% at its June 25 meeting, a widely anticipated move amid ongoing economic headwinds and unstable political conditions in the country.
The vote saw six MPC members in favor of maintaining the policy rate, while a lone dissenter called for a 0.25 percentage point cut, reflecting ongoing debate among policymakers about how best to support Thailand’s fragile economic recovery.
Wednesday’s decision aligns with market expectations. A recent Reuters poll conducted from June 16 to 20 found that 17 of 27 economists predicted the Bank of Thailand would leave the policy rate unchanged. The remaining 10 analysts forecast a quarter-point reduction, signaling divisions over the optimal policy stance amid persistent soft inflation and slowing growth.
Headline consumer prices fell for a second consecutive month in May, dropping 0.57% after a 0.22% decrease in April, indicating subdued price pressure. Meanwhile, Thailand’s first-quarter GDP growth eased to 3.1%, underscoring the country’s fragile economic momentum as external trade uncertainties and domestic political tensions weigh on the outlook.
Despite these challenges, the central bank has opted to conserve its limited rate-cutting ammunition.
Looking ahead, the market is split on when the next policy move will come. Among 24 economists surveyed for their outlook beyond June, 17 anticipate a 25 basis point reduction by September, bringing the benchmark rate down to 1.50%. Five expect the rate to remain steady, while two foresee further cuts to 1.25%. By the end of 2025, half of respondents see the policy rate holding at 1.50%.
For now, the Bank of Thailand appears committed to a cautious approach, preserving flexibility in the face of ongoing uncertainty both at home and abroad.
