Wachirawat Banchuen, Senior Financial Market Strategist at Siam Commercial Bank Financial Market Group (SCB FM), revealed that Thailand’s policy interest rate is projected to decrease from its current level of 1.75% to 1.25% by year-end.
SCB FM estimates that the Monetary Policy Committee (MPC) will cut the policy rate two more times in the second half of the year, assigning a probability of 70–80%.
The first rate cut could materialize as early as the next MPC meeting on August 13, 2025. However, for the upcoming meeting on June 25, the MPC is widely expected to hold rates steady, awaiting clearer economic signals before making a move.
SCB FM sees the expected rate cuts in the second half as a crucial tool to support Thailand’s economic recovery, particularly amid fragile domestic demand and an uncertain export outlook.
Wachirawat further noted that both the Thai economy and the baht are at a pivot point. The recent easing of US-China trade tensions signals a positive outlook for the overall Thai economy.
Earlier concerns regarding potential adverse impacts from President Donald Trump’s tariff policies on Thailand have also subsided, as assessments of such measures’ severity now appear less daunting than previously anticipated.
Consequently, the downward pressure on the baht is beginning to ease. With these positive developments, the baht is expected to rebound by 1–2% in the remainder of 2025, supported by reduced trade tension and improved international trade policy stability.
The short-term range for the baht is expected to be THB 32.30–33.30 per US dollar over the next 1–2 months, with the year-end forecast at THB 31.50–32.50.
Krungsri Securities (KSS) notes that the current downcycle in Thai interest rates will be “strong” and distinct from previous cycles. KSS believes the world faces a Global Policy Shock, primarily due to the effects of the Trump 2.0 scenario.
Unlike 2017–2019, however, the Federal Reserve is now effectively closed to rate hikes and, although its cuts may be slow, this dynamic has already pushed Thai bond yields sharply lower. The short-term 1-year bond yield has dropped to 1.51%, reflecting strong demand from both local and foreign investors.
KSS sees over a 90% probability of a 0.25% rate cut by the MPC on June 25. If Thailand enters a “New Capex Cycle,” this would be a positive long-term catalyst for investment and infrastructure stocks.
KSS’ top equity picks set to benefit from lower rates include:
- Power sector: Gulf Development PCL (SET: GULF), Global Power Synergy PCL (SET: GPSC).
- ICT sector: Advanced Info Service PCL (SET: ADVANC), True Corporation PCL (SET: TRUE).
- Finance sector: Muangthai Capital PCL (SET: MTC), Srisawad Corporation PCL (SET: SAWAD).
- High-debt companies: CP All PCL (SET: CPALL), Berli Jucker PCL (SET: BJC).
UOB Kay Hian Securities (Thailand) adds that persistent negative inflation increases the likelihood of “at least one more rate cut.” May inflation came in at -0.57% YoY, marking a continued decline and keeping Thai inflation the lowest in ASEAN, due to softening energy and food prices. As a result, the MPC is expected to cut rates by at least 0.25% in 2025.
Another supportive factor is the upcoming appointment of a new Bank of Thailand Governor, potentially from the private sector, who may place a stronger emphasis on stimulating the economy, raising the prospect for further policy rate reductions.
UOBKH’s top stocks benefiting from lower rates include:
- Power plants: GULF, B.Grimm Power PCL (SET: BGRIM), Electricity Generating PCL (SET: EGCO), Ratch Group PCL (SET: RATCH).
- Retail: CPALL, which stands to gain indirectly from an expected boost in purchasing power.
