By Veronica Dudei Maia Khongwir
BENGALURU (Reuters) – The Bank of Thailand (BOT) will hold its key interest rate at 2.25% at its final policy meeting for the year in December, following an unexpected 25-basis-point cut on Wednesday, according to economists in a Reuters snap poll.
While the BOT’s decision on Wednesday to cut rates – the first reduction since May 2020 – surprised most forecasters, assistant governor Sakkapop Panyanukul said the move was “not an easing cycle… just recalibrating the policy interest rate.”
The government has been repeatedly urging the central bank to ease policy to stimulate sluggish growth in Southeast Asia’s second-largest economy.
A strong majority of economists, 20 of 24, in the Oct. 16-17 poll forecast the central bank to keep its benchmark one-day repurchase rate unchanged at 2.25% on Dec. 18. Four expected a 25 basis point cut.
Among its Asian peers, Bank Indonesia, Bank of Korea and the Philippine central bank have also started cutting rates.
“From a fundamental macroeconomic perspective of growth, inflation and financial stability, we were already seeing rate cuts in the picture. It’s just a recalibration of the timing rather than the next step,” said Lavanya Venkateswaran, senior ASEAN economist at OCBC Bank.
“The BOT has become more growth supportive and targeted to alleviate debt servicing pressures and boosting consumption. They will probably continue with a shallow rate cutting cycle.”
Poll data showed the BOT reducing rates by 25 basis points next quarter to 2.00%. It also forecast rates to stay at that level for the rest of 2025, same as the survey taken before the October monetary policy meeting.
The Thai baht has gained around 3% year-to-date, raising some concerns among economists that a stronger currency could undermine exports and tourism spending.
“The baht had been among the stronger currency performers against the dollar, and the BOT might have judged that to be a risk to economic growth,” said Eugene Tan, an associate economist at Moody’s Analytics.
“The BOT now faces the delicate task of striking a balance between managing household debt levels relative to GDP and keeping growth sustainable.”
(Other stories from the October Reuters global economic poll)
(Reporting by Veronica Dudei Maia Khongwir; Polling by Devayani Sathyan; Editing by Shri Navaratnam)
