CIMB Thai Bank (CIMBT) predicts that the Bank of Thailand may significantly decrease its policy rate by one percentage point from December 2024 to the following year, aligning with an anticipated decrease in the US policy rate. CIMBT’s chief economist, Amonthep Chawla, mentioned the expectation that the Monetary Policy Committee (MPC) could reduce the policy rate by 0.25 percentage points in December this year to 2.25%. This forecast is based on the inflation rate coming into the central bank’s target range of 1-3% in the second half of this year.
Amonthep also mentioned projections that the US Federal Reserve might lower its policy rate twice this year, in September and December, and make three additional decreases next year to address inflation and support economic growth.
Anticipating this trend, CIMBT expects the MPC to follow suit by reducing the policy rate three times in 2025, each time by 0.25 percentage points, leading to a policy rate of 1.5% by the end of the following year.
According to Amonthep, these rate cuts are expected to reduce financial expenses, stimulate investment, and bolster long-term economic growth in Thailand.
In the article, Amonthep highlighted Thailand’s GDP growth being below its potential rate of 3%, warning of stagnation if economic stimuli and reforms are not implemented. CIMBT is maintaining its forecast for Thai GDP growth in 2024 at 2.3%, with expectations to improve in the coming quarters and reach 3.2% in 2025.
The bank revised growth forecasts for public consumption, public investment, and private investment in light of anticipated improvements in the tourism sector driving economic growth in 2024 and 2025. However, external factors like geopolitical tensions, global elections, and US interest rates remain uncertainties that could impact Thailand’s economy next year.
Furthermore, challenges within Thailand’s manufacturing sector could pose long-term obstacles to economic expansion, as noted by Amonthep.
