Economists predict that both the US Federal Reserve (Fed) and the Bank of Thailand (BoT) will keep interest rates steady during their first meetings of 2025, despite recent calls from US President Donald Trump for immediate rate cuts.
Speaking at the World Economic Forum in Davos, Trump stated, “I demand that global interest rates drop immediately, and similarly, OPEC should lower oil prices.”
The Federal Open Market Committee is set to meet on January 29-30, while the Thai central bank will hold its meeting on interest rates on February 26.
Lalita Thienprasiddhi, head of macro research at Kasikorn Research Centre (K-Research), expects the Fed to maintain its policy rates during the upcoming meeting, noting that headline inflation rose for three consecutive months, reaching 2.9% in December, while core inflation remains above 3%. Additionally, the US labor market continues to show strength.
“The Fed is likely to keep rates between 4.25% and 4.5% throughout the first quarter of 2025 due to uncertainties stemming from Trump’s policies, which could potentially drive inflation higher,” she stated.
Kanjana Chockpisansin, head of banking and financial sector research at K-Research, anticipates that the Bank of Thailand will also hold rates steady during its first two meetings on February 26 and March 12, although she forecasts a potential rate cut in April.
Maybank in Kuala Lumpur echoed this sentiment, expecting the Thai central bank to maintain its policy rate at 2.25% on February 26, citing “heightened external uncertainty and shifts in the Fed’s anticipated policy direction.”
With the government under pressure to introduce further economic stimulus measures, Maybank has slightly upgraded Thailand’s GDP forecast to 2.8% for this year, up from an earlier projection of 2.6% for 2024, bolstered by increased public investment and consumption, although they remain cautious about downside risks.
Given the robust state of the US economy, Kitpon Praipaisarnkit, vice president of UOB Kay Hian Securities (Thailand), sees a likelihood for the Fed to initiate its first rate cuts in May or June. “I do not anticipate any surprises regarding rate cuts in the first half of the year,” he remarked.
