KResearch: Policy rate likely to be cut to 1.75% amid rising economic risks

KResearch expects a 0.25% rate cut in the next MPC meeting amid rising economic risks from the earthquake, the Trump tariff policy

Kasikorn Research Centre (KResearch) has revealed that at the upcoming Monetary Policy Committee (MPC) meeting on April 30, 2025, the Bank of Thailand (BOT) is likely to cut the policy interest rate by 0.25%, bringing it down to 1.75%. 

This anticipated move is largely due to the impact of the earthquake that struck in late March, as well as growing economic headwinds.

Key concerns include increased risks stemming from the US tariff hike policy, the global economic slowdown, lower-than-expected tourist arrivals from China and South Korea, and weakening domestic economic momentum.As a result, KResearch expects the MPC to significantly revise down its economic outlook for Thailand in 2025 from the BOT’s earlier projection of 2.9% made in December 2024. 

Inflation forecasts may also be adjusted downward to below 1.0%, influenced by softening global oil prices and recent domestic energy price cuts aimed at easing the cost of living.

Looking ahead, KResearch anticipates that the MPC may cut rates at least once more in the second half of 2025, reflecting expectations of a notable economic slowdown during that period. The outlook is clouded by uncertainties around the US reciprocal tariff measures once the current 90-day delay ends, prolonged trade negotiations, and potentially weaker-than-expected inbound tourism.

Nonetheless, the pace of any future rate cuts will likely depend on upcoming economic data. 

The MPC has already signalled in its February 2025 meeting that any rate reduction at this time does not mark the beginning of a downward interest rate cycle.

Moreover, the MPC is expected to preserve monetary policy space to address future uncertainties and will likely monitor the effects of any additional fiscal stimulus measures that may help support the Thai economy in the coming months.

(2025/04/26-00:00)