By Pranoy Krishna
BENGALURU (Reuters) – The Bank of Thailand (BOT) will keep its key interest rate unchanged on Wednesday and cut only once this year to preserve a policy buffer amid growing global uncertainties, a Reuters poll of economists found.
With Thailand’s economy growing a solid 3.2% last quarter – the fastest in over two years – and inflation firmly under control there was no immediate need for rate cuts in the trade and tourism-dependent country.
The BOT was expected to wait and assess the impact of existing government policies, including its cash handout scheme launched in September, before considering further action.
Over 60% of economists, 16 of 26, in the February 14-21 Reuters poll forecast the central bank will keep its benchmark one-day repurchase rate at 2.25% on February 26, while 10 expected a 25-basis-point cut.
“The Q4 (GDP) print was the highest in many quarters…and inflation has gone back into the 1-3% target range. I don’t see any reason for the Bank of Thailand, at this stage, to consider another cut,” said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.
With growth still short of the government’s ambitious 3.5% target the Thai finance ministry has repeatedly urged the central bank to cut rates further this year to support the economy.
Among economists who provided a long-term outlook on rates, a strong majority, 17 of 23, forecast a 25-bp cut by June end, bringing the rate to 2.00%. Two saw rate at 1.75% and four predicted no change.
While there was no clear consensus on where rates will go next, the median forecast showed they will remain at 2.00% at least until mid-2026.
“Additional rate cuts cannot be ruled out if downside risks to growth materialize, particularly due to the direct and indirect impact of U.S. trade protectionism measures,” said Sathit Talaengsatya, economist at UOB Thailand.
Thailand’s long-term outlook is under pressure from weakening demand from top trading partner China and uncertainty over U.S. protectionist trade policies which pose risks to trade and tourism – key pillars of the economy. (Other stories from the February Reuters global economic poll)
(Reporting by Pranoy Krishna; Polling by Veronica Khongwir; Editing by Vivek Mishra and Eileen Soreng)
