Thailand’s Monetary Policy Outlook

By Orathai Sriring and Chayut Setboonsarng

BANGKOK (Reuters) – Thailand’s monetary policy committee decides on interest rates based on the economic outlook and is prepared to adjust these rates if current assessments change, according to the Governor of the Bank of Thailand, Sethaput Suthiwartnarueput, speaking at a business forum on Wednesday.

The policy interest rate remains at 2.5%, among the lowest globally. The Governor highlighted that structural factors are hindering economic growth, projecting a 2.6% growth for Southeast Asia’s second-largest economy this year and 3% in 2025. He expressed concern over these growth figures, stating, “It’s not a great number,” and emphasized the need for higher long-term growth to improve living standards and welfare.

Despite ongoing government pressures for a rate cut, the central bank maintained interest rates during its fifth consecutive meeting. The next review is scheduled for October 16. Sethaput indicated that the BOT would modify rates if the economic outlook shifts, stressing the importance of “policy optionality” to ensure resilience amid uncertainties.

While tourism shows growth, other sectors, notably manufacturing, have been lagging due to structural challenges, including demographic shifts. The central bank is also monitoring a potential credit contraction within the small and medium-sized enterprise (SME) sector, as signs of deteriorating credit quality have emerged. The Governor remarked on the challenge of reducing the household debt-to-GDP ratio from over 90% to a target of 80%, which will require time.