In addition to growing political pressure, Thailand’s weakening economy adds to the case for the central bank to cut interest rates sooner rather than later, fund managers said.
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Thailand’s central bank unexpectedly cut its key interest rate at a policy review on Wednesday, a move the government has long called for to revive a sluggish economy with inflation below target.
The Bank of Thailand’s Monetary Policy Committee voted 5-2 to lower the one-day repo rate by 25 basis points to 2.25%, after having been at a decade-high of 2.50% since September 2023.
Only 4 out of 28 economists Reuters poll It had been expected to cut interest rates by a quarter of a percentage point this week. Twenty-four economists expected no change in policy.
The last policy change was a 25 basis point interest rate hike in September last year.
The Bank of Thailand raised its economic growth forecast for 2024 to 2.7% from the previous 2.6%, and forecast economic growth of 2.9% in 2025, lower than the previous forecast of 3.0%.
The World Bank predicts economic growth of 2.4% this year and 3.0% next year.
Southeast Asia’s second largest economy The country lags behind regional peers as it faces high household debt and borrowing costs and weak exports.
The central bank lowered its overall inflation forecast for 2024 to 0.5% from 0.6%, below the target range of 1% to 3%.
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