BANGKOK :Thailand’s central bank left its key interest rate unchanged on Wednesday, as expected, saying it was saving some policy ammunition if needed to support an economy expected to slow amid trade uncertainty and renewed domestic political turmoil.
The central bank said growth was stronger than expected in the first half of the year, in part because of frontloading of export orders to beat U.S. tariffs, but noted the outlook was uncertain and it was ready to cut rates as needed.
The Bank of Thailand’s monetary policy committee voted 6 to 1 to keep the one-day repurchase rate at 1.75 per cent, the lowest in two years. The BOT said its rate cuts in February and April were providing some support to the economy.
“The Thai economy is projected to slow down going forward, as a result of increasing risks to merchandise exports stemming from U.S. trade policies as well as geopolitics and domestic factors,” it said in a statement.
The stronger-than-expected start to the year saw the BOT lift its central-case growth forecast to 2.3 per cent for 2025, almost matching last year’s 2.5 per cent and more optimistic than some market analysts.
Assistant Governor Sakkapop Panyanukul told a press conference that the committee was ready to “react if the economy is slower than expected.”
“The BOT’s tone remains dovish, pointing to room for further accommodation in the coming months,” said Lavanya Venkateswaran, senior ASEAN economist at OCBC.
“Our baseline is for another 25 basis point cut in the second half as downside risks to growth remain rife from perceived domestic political uncertainties and U.S. tariff risks,” she said.
Capital Economics said it expected 50 basis points of rates cuts before the end of the year.
Thailand faces a 36 per cent U.S. tariff on its exports, a key driver of growth, if it fails to negotiate a reduction before a moratorium expires in July. A tariff of 10 per cent has been set for most nations while the moratorium is in place.
The baht was largely unchanged against the U.S. dollar after the decision to hold rates steady, which had been expected by 21 of 33 economists in a Reuters poll.
Thailand’s economy has struggled with weak consumption, soaring household debt, slowing tourism, trade uncertainty and potentially steep U.S. tariffs.
The BOT also lowered its forecast for tourist arrivals, a strng domestic growth driver, to 35 million this year.
Adding to the challenges is a fresh round of political turmoil that could bring down Prime Minister Paetongtarn Shinawatra or the coalition government led by her Pheu Thai party.
Sakkapop said that the political issues had not been factored into its forecasts, and the central bank would wait to see developments.
