The Bank of Thailand is expected to cut interest rates at least twice more this year, supported by low inflation and the need to address the economic fallout from the global trade war, according to market analysts. The next rate reduction is anticipated in the third quarter.
The latest data from the Commerce Ministry showed that Thailand’s consumer price index (CPI) fell by 0.22% in April, marking the first contraction in 13 months. Analysts from KGI Securities (Thailand) had projected a smaller decline of 0.1%.
Burin Adulwattana, Managing Director and Chief Economist at Kasikorn Research Center (K-Research), forecasted that the central bank will cut the interest rate “at least one more time” this year, following a recent 25 basis point (bps) reduction. Last month, the Bank of Thailand lowered its key interest rate by 25 bps for the second consecutive meeting, bringing it to 1.75%—the lowest level in two years.
Economic pressures, including the impact of US tariffs on Thai exports and a slowdown in tourism, are driving the central bank’s stance on monetary easing. “The US tariffs would significantly impact Thai exports as tourism has begun to slow down,” said Mr Burin.
K-Research predicts that despite a temporary 90-day halt on tariffs announced by US President Donald Trump, Thai exports are set to decline in the second half of the year. The research unit also highlighted a possible contraction in outbound shipments due to potential US tariff hikes.
Krungsri Securities (KSS) has projected at least two more rate cuts this year, citing low inflation and economic risks from trade tariffs. The brokerage emphasised that the current conditions do not indicate deflation, but lower inflation is expected as imported goods from the US could enter the Thai market, driven by reciprocal tariffs.
Maybank, based in Kuala Lumpur, has revised its inflation outlook for Thailand in 2025 to 0.5% for headline inflation and 0.8% for core inflation, down from previous estimates of 1%. The bank also adjusted forecasts for 2026 to 0.8% and 1%, respectively, due to external shocks and subdued domestic demand.
“First-quarter GDP growth is expected to reach 2.7%, with the central bank likely to pause rate changes in June while assessing the economic effects of US tariffs. A further rate cut of 25 bps is expected in the third quarter,” noted Maybank.
As Thailand navigates external pressures and domestic economic challenges, analysts widely anticipate the Bank of Thailand to continue prioritising rate cuts to support growth and stabilise inflation.
–Bangkok Post
