The Bank of Thailand (BoT) may have multiple opportunities to cut interest rates this year to support the economy, particularly if US tariffs on Thai goods remain less competitive compared to regional peers, according to analysts.
Kanjana Chockpisansin, head of research at Kasikorn Research Center (K-Research), stated that the central bank’s Monetary Policy Committee (MPC) is likely to implement at least one more rate cut during the year. She added that more cuts could be on the horizon if US tariffs on Thai exports are higher than those imposed on other regional economies, which could weaken Thailand’s economic outlook in the latter half of the year.
“If Thailand cannot secure a more competitive US tariff rate, exports and private investment could suffer significantly, leading consumers to reduce spending,” Ms. Kanjana explained to the Bangkok Post. She also mentioned that the government’s limited fiscal capacity makes it challenging to effectively stimulate economic growth through government spending.
The MPC has three remaining meetings scheduled for August, October, and December to consider reducing the current policy rate of 1.75%. Meanwhile, the baht weakened slightly to 32.68-32.70 against the US dollar on Thursday after the Federal Reserve maintained interest rates at 4.25-4.50% for a fifth consecutive meeting.
Fed Chair Jerome Powell indicated that the central bank is in no rush to cut rates, closely monitoring how President Donald Trump’s tariffs influence US inflation throughout the year. The Fed’s next three meetings are scheduled for this year, with the possibility of a rate cut likely in October or December, rather than in September.
Asia Plus Securities predicts the MPC might reduce rates by 25 basis points as soon as August, citing concerns about economic slowdown due to the impact of US tariffs. The brokerage also noted that fiscal measures have yet to fully stimulate the economy, especially with inflation dropping for three consecutive months by 0.25% year-on-year.
As the US dollar strengthens following the Fed’s decision and strong US economic data, K-Research forecasts the baht could weaken to around 33.70 against the dollar later this year.