Thai central bank unexpectedly cuts policy rate by 25 bps
This is to further support an economy pressured by US tariff uncertainty and a strengthening baht
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[BANGKOK] Thailand’s central bank unexpectedly cut its key interest rate at a review on Wednesday (Feb 25). The move comes as it sought to further support an economy pressured by US tariff uncertainty and a strengthening baht.
The Bank of Thailand’s monetary policy committee voted four to two, to cut the one-day repurchase rate by 25 basis points to 1 per cent at its first review of the year.
Only six of the 27 economists in a Reuters poll had forecast a quarter-point cut at the meeting. The others predicted no policy change.
The central bank said: “Economic growth is projected to remain below potential in 2026 and 2027, and will be uneven across sectors, reflecting structural impediments and intensified competition.”
The Thai economy, which has lagged its regional peers since the pandemic, has struggled with multiple challenges, including US tariffs, high household debt and the baht’s strength.
The economy grew 2.5 per cent in the final quarter of 2025 from the year before, faster than expected and outpacing a growth of 1.2 per cent in the previous quarter.
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The baht has gained more than 1 per cent against the US dollar so far in 2026 after a 9 per cent rise last year, threatening the competitiveness of the export and tourism sectors, which are both key economic drivers.
“The (baht’s) appreciation has tightened financial conditions for exporters, particularly for products facing intense price competition and low profit margins,” the central bank added.
Wednesday’s reduction was the sixth since October 2024, with rates down by a total of 150 basis points, as the authorities try to spark a revival in South-east Asia’s second-largest economy. The rate was also lowered at the previous review in December. REUTERS
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