The Monetary Policy Committee (MPC) of the Bank of Thailand has voted 5 to 2 in favor of reducing the policy interest rate by 0.25%, lowering it from 2.50% to 2.25% per year, effective immediately.
The Thai economy is expected to grow in line with previous projections, while headline inflation is anticipated to gradually return to the target range by the end of 2024. The household debt-to-income ratio is also expected to continue its gradual decline.
The MPC concluded that the current neutral monetary policy stance remains suitable for the economic and inflation outlook. The majority of committee members supported the rate cut, viewing it as a way to ease debt burdens without hindering the ongoing reduction in the household debt-to-income ratio. They considered the current level of interest rates to be neutral and aligned with the economy’s potential, especially in light of slowing credit expansion.
However, two committee members voted to maintain the policy rate at its current level. They argued that the current rate remains appropriate for economic and inflation trends and stressed the importance of preserving long-term financial stability. They also highlighted the need to retain the capacity of monetary policy to address future uncertainties.
Thailand’s economy is projected to grow by 2.7% in 2024 and 2.9% in 2025, driven by tourism, private consumption, and improving exports, particularly in the electronics sector. However, the recovery remains uneven across industries.
Financial conditions have tightened slightly. The Thai baht has appreciated against the US dollar, reflecting both global monetary policies and domestic factors. Borrowing costs for the private sector through commercial banks and the bond market have remained stable, while overall credit growth has slowed, particularly in small and medium-sized enterprises (SMEs) facing structural challenges, as well as in the hire-purchase and credit card sectors.
Source: thailand.prd.go.th