Rate expectations: BoT tipped to slash interest rates
Thailand’s top bankers are bracing for a financial shake-up, with the central bank set to cut interest rates this week as economic headwinds from abroad leave growth floundering.
The Bank of Thailand (BoT) is widely expected to trim its key policy rate by 0.25 percentage points tomorrow, April 30, as the kingdom battles a growing storm of economic setbacks.
Kasikorn Research Center (K-Research) predicts the Monetary Policy Committee (MPC) will vote to lower the rate from 2% to 1.75%, in a bid to prop up a wobbly economy facing pressure from US tariff hikes, slowing global demand, and a worrying drop in tourist arrivals from China and South Korea.
“Given the prevailing headwinds, we expect the Bank of Thailand will cut the policy rate at least once more in the second half of the year,” K-Research said, warning that Thailand’s growth prospects have been dented not just by foreign factors, but also by the fallout from the March earthquake and weaker domestic spending.
However, BoT officials have signalled that this week’s expected cut should not be seen as the start of a full-blown rate-slashing spree. The MPC is determined to keep its powder dry, wanting to maintain enough flexibility to respond to any fresh shocks later in the year.
The committee will also be keeping a keen eye on any new government stimulus packages that could boost the economy without relying solely on monetary policy.
Adding to the chorus, SCB Economic Intelligence Center (EIC), part of Siam Commercial Bank, believes the BoT will cut rates three times this year, bringing the benchmark down to 1.25% by the end of 2025, Bangkok Post reported.
“There is a high probability that the central bank will cut the policy rate by 0.25 percentage points at its meeting on Wednesday,” the EIC said, arguing that deeper cuts are needed to shield Thailand from the fallout of US trade tensions and tighter global financial conditions.
If this week’s move goes ahead, it would push rates below the levels seen during the 2018–19 US-China trade war, a period when Thailand weathered external storms far better than it is now.
Meanwhile, analysts at CIMB Thai Bank’s research centre agree that a further rate reduction is likely tomorrow, following an earlier cut in February. They forecast the rate could hit 1.25% this year, and possibly dip to 1% if the economy weakens further.
However, they cautioned that if tariff-driven inflation picks up, the BoT might be forced to change tack, focusing instead on direct support measures like debt relief for small businesses and liquidity injections.
With credit growth faltering and fears of a liquidity trap growing, many experts say it’s fiscal policy, not just lower interest rates, that will need to take centre stage to keep Thailand’s fragile recovery afloat.
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