Bank of Thailand unexpectedly stands pat in October

Central Bank holds fire: At its meeting on 8 October, the Bank of Thailand (BOT) unexpectedly decided to maintain its one-day repurchase rate at 1.50%, leaving the policy rate at its lowest level since February 2023 and defying market expectations of a 25 basis points reduction. The decision was not unanimous: Five members voted for a hold, while two voted for a 25 basis points cut.

Bank holds to preserve policy space: The BOT chose patience over haste as the economy walks a tightrope between recovery and risk. The Bank said that that policy should remain accommodative as exports feel the chill of U.S. protectionism and tourist arrivals lose momentum. That said, sturdy credit contraction and persistent deflation—which hinder the effectiveness of monetary policy easing—prompted the board to hold rates steady and allow earlier cuts to fully trickle down to the economy.

BOT to cut by the end of 2025: The Central Bank indicated that “monetary policy should be accommodative to support the economy.” Accordingly, the vast majority of our panelists expect another rate cut ranging from 25 to 50 basis points at the last 2025 meeting on 17 December as U.S. trade policies weigh on economic growth. That said, a small minority of our panel sees rates remaining at their current level, as the BOT might opt to preserve some of its already limited policy space.

Panelist insight: Commenting on the outlook, Nomura’s Charnon Boonnuch and Euben Paracuelles stated: “We expect the BOT to maintain its gradual pace in this cycle by delivering a 25bp cut again to 1.25% at the next policy meeting in December, when we expect clearer signs of weaker growth, persistently tight financial conditions and deflation risks, before another 25bp cut in Q1 2026 to 1.00%.”

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