BANGKOK — Thailand’s central bank has slashed its benchmark interest rate by 0.25 percentage points to 1.50%, a unanimous move aimed at pumping more liquidity into the slowing economy as growth momentum weakens in the second half of the year. The Thai stock market soared on the news, closing up 18.36 points or 1.46%, as investors cheered the monetary boost designed to ease pressure on businesses and households.
Govt Hails Bold Move
Deputy Prime Minister and Finance Minister Pichai Chunhavajira called the rate cut a clear signal of unity from the Monetary Policy Committee on the economic outlook.
He said the decision would push the country’s substantial liquidity into the economy instead of leaving it parked with central institutions, helping to ease tight market conditions and laying the groundwork to tackle deeper problems.
The Finance Ministry has 3–4 more initiatives planned in close coordination with the Bank of Thailand, with the baht likely to weaken — a shift welcomed by exporters.
“This direction will help significantly. If we use more money, the baht will follow suit. Exporters will certainly be pleased,” Pichai said.
Rate Cut Seen Weakening Baht
Monetary Policy Committee Secretary Sakkapop Panyanukul stressed that Thailand’s economy is not in crisis, but the cut will prevent financial burdens from hitting citizens and businesses too hard.
The current rate is suitable for now, though more reductions are possible if the economy worsens.
“Preserving monetary policy ammunition is important… if asked whether rates can be cut further, they can still be reduced like during the previous COVID crisis,” he said.
Sakkapop noted the baht had strengthened more than in comparable economies, adding pressure from rising gold prices and foreign funds flowing into the stock market. Discussions with the Finance Ministry and other agencies are ongoing.
US Tax Changes Take Toll
Sakkapop said the first half of the year was buoyed by strong exports and manufacturing, but momentum will fade as US tax adjustments hit harder in the months ahead.
While Thailand’s tax rates remain competitive, steep US hikes, fewer foreign tourists, weaker consumption and cautious bank lending are weighing on the economy.
“It’s time for businesses to enhance their competitive capabilities because monetary policy won’t be the complete answer to structural problems,” he warned.
Credit Caution Stalls Recovery
The Bank of Thailand is expanding debt restructuring programs for vulnerable debtors, urging broader adoption to help companies compete globally.
While a recession is unlikely, growth will stay muted, with GDP expected to rise just 2.3% in 2025.
Of the three previous rate cuts, 43% of the policy shift has flowed through to commercial banks. Although the last cut had less impact than earlier moves, this one is expected to have stronger effects due to more room for improvement.
BOT Steps Up Debt Relief
Rate cuts are just part of the picture — the central bank is also intensifying debt assistance and restructuring for at-risk groups, complementing other measures to keep the economy afloat.
