Thai Central Bank Cuts Interest Rate to 1.75%, Slashes Growth Forecasts Amid Tariff Concerns

BANGKOK — The Bank of Thailand (BOT) cut its benchmark interest rate by 25 basis points to 1.75% on Wednesday, as the country’s economic outlook dims amid escalating global trade tensions and weaker-than-expected tourism.

In a 5-to-2 vote, the Monetary Policy Committee (MPC) decided the cut was necessary to support the slowing economy and counter rising downside risks. Secretary of the committee, Sakkapop Panyanukul, said the move aligns with deteriorating financial conditions and falling inflation, which is projected to drop below the central bank’s 1–3% target range due to supply-side factors.

Growth and Inflation Forecasts Downgraded

The BOT now expects GDP growth of just 2.0% in 2025, sharply down from the 2.9% forecast made in December. In a worst-case scenario, where U.S. tariffs rise further, Thailand’s growth could fall to 1.3% this year and 1.0% in 2025.

Thailand is among the Southeast Asian countries most affected by U.S. trade policies, with a looming 36% tariff threatening Thai exports if negotiations fail before a global moratorium expires in July.

Tourism and Inflation Also Hit

The bank also downgraded its tourist arrival forecast for 2025 to 37.5 million, down from 39.5 million projected in December, further weakening the growth outlook.

Inflation forecasts were also revised lower:

Headline inflation for 2025: 0.5% (from 1.1%)
Core inflation: 0.9% (from 1.0%)

Policy Outlook and Currency Monitoring

While the baht remained stable following the decision, the central bank signaled readiness to adjust interest rates further if necessary, but analysts believe this could be the final rate cut in the short term.

“We think today’s easing will be the last for the foreseeable future as the MPC likely will adopt a wait-and-see approach with regards to the lingering tariff uncertainty,” said Miguel Chanco, economist at Pantheon Macroeconomics.