By Rahul Trivedi
BENGALURU- The Bank of Thailand (BOT) is set to cut its key interest rate by a quarter percentage point on Wednesday to support slowing economic growth, according to a Reuters poll of economists who said US tariffs have negatively impacted business sentiment.
Inflation remained under control at 0.8 percent in March and Southeast Asia’s second-largest economy grew slower than expected last year giving the BOT room to further ease policy to stimulate growth and weaken the baht to support exports.
Over 70 percent of economists, 20 of 28, in an April 21–28 Reuters poll expected the BOT to lower its benchmark one-day repurchase rate by 25 basis points to 1.75 percent on April 30, the lowest in nearly two years. The other eight predicted no change.
This marks a complete U-turn from a snap poll taken after the BOT’s unexpected February rate cut when most economists had expected a pause in April. – Reuters
“A lower growth forecast and delayed negotiations with the US suggest the need for a cut now,” said Shreya Sodhani, regional economist at Barclays.
“The backdrop is now materially different from when the BOT last met in February. The global situation has deteriorated with the on-and-off US tariffs. Structural domestic growth risks are compounded by the risk of excess capacity from China and the confidence hit from the earthquake.”
Of those who provided a long-term view, 14 of 25 economists expected the key rate to drop by 50 basis points to 1.50 percent by the end of next quarter, half a percentage point lower than in the previous survey.
While median forecasts showed rates holding at that level for the rest of the year, there was no clear consensus, marking the most dovish outlook economists have expressed so far this year.
With interest rates among the lowest in Asia, the BOT has limited room to cut further. Policymakers pointed to structural factors driving Thailand’s economic slowdown and emphasized the need for government fiscal support.
“While we expect the BOT to cut rates, limited space on the monetary side means the baton will be passed to already stretched fiscal policy,” added Sodhani.
The poll also showed economists had chopped their 2025 growth forecast to 2.1 percent from 2.9 percent in January, well below the BOT’s February 2.5 percent forecast. With no swift rebound in sight and stalled trade negotiations over proposed 36 percent tariffs on Thai exports economists raised concerns about further economic challenges.
