BANGKOK, Oct 17 — The Bank of Thailand (BOT) will hold its key interest rate at 2.25 per cent at its final policy meeting for the year in December, following an unexpected 25-basis-point cut yesterday, according to economists in a Reuters snap poll.
While the BOT's decision on Wednesday to cut rates — the first reduction since May 2020 — surprised most forecasters, assistant governor Sakkapop Panyanukul said the move was "not an easing cycle... just recalibrating the policy interest rate."
The government has been repeatedly urging the central bank to ease policy to stimulate sluggish growth in Southeast Asia's second-largest economy.
A strong majority of economists, 20 of 24, in the October 16 to October 17 poll forecast the central bank to keep its benchmark one-day repurchase rate unchanged at 2.25 per cent on December 18. Four expected a 25 basis point cut.
Among its Asian peers, Bank Indonesia, the Bank of Korea and the Philippine Central Bank have also started cutting rates.
"From a fundamental macroeconomic perspective of growth, inflation and financial stability, we were already seeing rate cuts in the picture. It is just a recalibration of the timing rather than the next step.
"The BOT has become more growth supportive and targeted to alleviate debt servicing pressures and boost consumption. They will probably continue with a shallow rate-cutting cycle," said OCBC Bank senior Asean economist Lavanya Venkateswaran.
Poll data showed the BOT reducing rates by 25 basis points next quarter to 2.00 per cent. It also forecast rates to stay at that level for the rest of 2025, the same as the survey taken before the October monetary policy meeting.
The Thai baht has gained around three per cent year-to-date, raising some concerns among economists that a stronger currency could undermine exports and tourism spending.
"The baht had been among the stronger currency performers against the dollar, and the BOT might have judged that to be a risk to economic growth
"The BOT now faces the delicate task of striking a balance between managing household debt levels relative to the gross domestic product and keeping growth sustainable," said Moody's Analytics associate economist Eugene Tan.
— Reuters
