Thai Central Bank Lowers Key Policy Rate To 2 Pct Amid Economic Slowdown

BANGKOK, Feb 26 (Bernama) -- The Bank of Thailand’s (BOT) Monetary Policy Committee (MPC) has voted to cut the policy rate by 0.25 percentage points, bringing it down from 2.25 per cent to 2.00 per cent, effective immediately, in a bid to stimulate economic growth.

MPC secretary Sakkapop Panyanukul said the committee voted six to one in favour of the rate cut, with one member opting to maintain the policy rate at 2.25 per cent.

“The prevailing monetary policy framework seeks to maintain price stability, support sustainable growth, and preserve financial stability.

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“The committee believes that the lower policy rate is consistent with the current assessment of the economic outlook and remains resilient to risks going forward,” he said in a statement here on Wednesday.

Sakkapop explained that the Thai economy is projected to expand more slowly than anticipated, owing to structural impediments in manufacturing production as well as competition from imported goods, despite support from domestic demand and tourism.

“The Thai economy slowed more than expected in 2024 due to a significant inventory rundown, although domestic demand, tourism, and merchandise exports continued to grow,” he said.

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Looking ahead, he said the economy is expected to grow at a slower pace than anticipated due to structural challenges in the manufacturing sector and heightened competition from imported goods, particularly in the automotive, petrochemical, and construction materials industries.

Sakkapop noted that headline inflation is expected to stabilise around the lower bound of the target range due to supply-side factors, particularly the anticipated downward trend in global crude oil prices, as well as structural factors such as intense price competition from imported goods.

“The inflation rate at this level is not indicative of future deflation but instead helps alleviate high living costs and business expenses,” he said.

Sakkapop added that financial conditions remain tight, although loan growth and credit quality have shown signs of stabilising.

“The slower economic outlook is a result of structural issues, which require policies to increase economic competitiveness and enhance potential growth. The committee will closely monitor developments in the financial and economic outlook,” he said.

-- BERNAMA