Bank of Thailand keeps benchmark rate at 1.75pct
Sakkapop Panyanukul, Secretary of the Monetary Policy Committee, announced the outcome of the meeting on June 25, 2025, as follows:
The Committee voted 6 to 1 to maintain the policy rate at 1.75 per cent. One member voted to cut the policy rate by 0.25 percentage point from 1.75 to 1.50 per cent.
The Thai economy expanded more than anticipated in the first half of 2025 owing to manufacturing production and front-loading exports. Nevertheless, the economy is projected to slow down going forward, due to increasing risks to merchandise exports stemming from US trade policies, as well as geopolitics and domestic factors.
Meanwhile, headline inflation remains subdued due to supply-side factors. Credit growth is slowing down partly because of declining loan demand in some groups and rising credit risks.
The Committee deems that monetary policy should be accommodative to support the economy going forward. Previous policy rate cuts have already provided some cushion against prevailing risks.
However, most committee members voted to maintain the policy rate at this meeting, citing the importance of timing and the effectiveness of monetary policy amid high uncertainties and limited policy space. One committee member voted to cut the policy rate by 0.25 percentage point to alleviate interest rate burdens and support those affected by the weakening economic outlook.
The Thai economy is projected to expand by 2.30 per cent in 2025 and 1.70 per cent in 2026. This year's growth is partly due to a stronger-than-expected outturn in the first quarter and positive leading economic indicators in the second quarter.
Export growth, particularly in electronics and front-loaded goods to the US, has supported manufacturing and related service sectors. However, in the second half of 2025, the economy is expected to slow as merchandise exports face headwinds from US tariffs. Private consumption is also forecast to moderate in line with weakening income and consumer confidence.
The projected number of tourist arrivals has been revised down, although tourism receipts continue to grow due to higher spending per visitor. Certain business sectors are under pressure from intensified import competition and shifting consumer behaviour.
Headline inflation is forecast to remain subdued at 0.50 per cent in 2025 and 0.80 per cent in 2026, due to energy and fresh food prices. Core inflation is projected at 1.00 per cent in 2025 and 0.90 per cent in 2026.
Despite low headline inflation, primarily caused by supply-side factors, there has not been a broad-based decline in prices. Medium-term inflation expectations remain well-anchored within the target range.
Looking ahead, it is necessary to monitor geopolitical risks that could drive up global energy prices.
Overall credit growth remains negative. Financial institutions are cautious in extending credit, especially to SMEs and low-income households. Part of the credit contraction stems from subdued business demand and increased loan repayments.
Credit quality has continued to deteriorate, particularly in SME and housing loans. Interest rates in money markets and financial institutions have declined in line with the recent policy rate cuts.
The baht has appreciated slightly against the US dollar, driven by external factors and in line with regional currencies. The Committee will continue to closely monitor credit growth and credit quality, which could have implications for economic activity.
The prevailing monetary policy framework seeks to maintain price stability, support sustainable growth, and preserve financial stability.
The Committee assesses the economic outlook to remain highly uncertain and stands ready to adjust monetary policy going forward to align with the economic and inflation outlook and associated risks.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
14 hours ago
- The Star
Ringgit ends higher on regional trade optimism
KUALA LUMPUR: The ringgit closed higher against the US dollar today, supported by improved regional sentiment following a new United States-Vietnam trade deal, said SPI Asset Management managing partner Stephen Innes. At 6 pm, the local note rose to 4.2195/2255 versus the greenback from Wednesday's close of 4.2245/2305. Innes said the agreement to impose a reduced 20 per cent tariff on Vietnamese exports, down from a previously threatened 46 per cent has lifted risk appetite and supported regional currencies. "The markets see this as a positive sign for global trade recovery, which helped boost the ringgit,' he told Bernama. Innes also said that the weaker-than-expected US ADP jobs data, with only 33,000 jobs added in June, reinforced expectations of two US rate cuts this year, pressuring the greenback. He noted, however, that market focus might shift on tonight's non-farm payrolls report, with consensus at 106,000. At the close, the ringgit traded mostly lower against a basket of major currencies. It shrunk against the euro to 4.9756/9827 from 4.9748/9818, and depreciated against the Japanese yen to 2.9333/9376 from 2.9316/9360. However, it appreciated versus the British pound to 5.7621/7703 from 5.7859/7941 yesterday. The local note traded mixed against its ASEAN counterparts. It improved vis-à-vis the Singapore dollar to 3.3146/3196 from 3.3167/3217, and rose against the Thai baht to 13.0211/0457 from 13.0233/0482. It slipped against the Indonesian rupiah to 260.5/261.0 from 259.9/260.5, and weakened against the Philippine peso to 7.50/7.51 from 7.49/7.51 previously. - Bernama
New Straits Times
19 hours ago
- New Straits Times
Ringgit ends higher on regional trade optimism
KUALA LUMPUR: The ringgit closed higher against the US dollar today, supported by improved regional sentiment following a new United States-Vietnam trade deal, said SPI Asset Management managing partner Stephen Innes. At 6 pm, the local note rose to 4.2195/2255 versus the greenback from Wednesday's close of 4.2245/2305. Innes said the agreement to impose a reduced 20 per cent tariff on Vietnamese exports, down from a previously threatened 46 per cent has lifted risk appetite and supported regional currencies. "The markets see this as a positive sign for global trade recovery, which helped boost the ringgit," he told Bernama. Innes also said that the weaker-than-expected US ADP jobs data, with only 33,000 jobs added in June, reinforced expectations of two US rate cuts this year, pressuring the greenback. He noted, however, that market focus might shift on tonight's non-farm payrolls report, with consensus at 106,000. At the close, the ringgit traded mostly lower against a basket of major currencies. It shrunk against the euro to 4.9756/9827 from 4.9748/9818, and depreciated against the Japanese yen to 2.9333/9376 from 2.9316/9360. However, it appreciated versus the British pound to 5.7621/7703 from 5.7859/7941 yesterday. The local note traded mixed against its ASEAN counterparts. It improved vis-à-vis the Singapore dollar to 3.3146/3196 from 3.3167/3217, and rose against the Thai baht to 13.0211/0457 from 13.0233/0482. It slipped against the Indonesian rupiah to 260.5/261.0 from 259.9/260.5, and weakened against the Philippine peso to 7.50/7.51 from 7.49/7.51 previously.
Free Malaysia Today
20 hours ago
- Free Malaysia Today
Thai leader's suspension deals new blow to battered economy
Paetongtarn Shinawatra said yesterday she accepts the court's ruling but gave little clarity on her future. (AP pic) BANGKOK : Thailand's ruling coalition was already fraying when a court suspended prime minister Paetongtarn Shinawatra yesterday, raising fresh doubts about her survival, the country's economy and the future of a dynasty that has loomed over the Southeast Asian nation for decades. In a blow to a country long plagued by political instability, the constitutional court sidelined the 38-year-old leader over a complaint linked to a leaked phone call in which she appeared to criticise the army and side with Cambodia in a border dispute – a potential breach of conduct under the constitution. She has 15 days to respond. For now, deputy prime minister Suriya Jungrungreangkit leads a shaky coalition. The developments couldn't come at a worse time for Thailand: once feted as an Asian Tiger economy for its export-led growth, the country is mired in slow growth relative to its peers, with households burdened by debt, a budget bill outstanding and the imminent threat of Donald Trump's tariffs weighing down expectations. The government slashed its 2025 growth forecast by a full percentage point to 1.3% in May. Over at the central bank, governor Sethaput Suthiwartnarueput is due to leave Sept 30 and a successor has yet to be named. 'No one is at the helm and the Thai ship is going nowhere,' said Thitinan Pongsudhirak, a professor of political science at Chulalongkorn University in Bangkok. 'The budget bill has to be passed, so that's coming up with the wobbly, weak coalition government.' Amid all the turmoil, the Bhumjaithai Party, the ruling coalition's biggest partner, exited last month following weeks of infighting, and there's no guarantee now others that had promised to stay won't follow. The court has yet to say how long it will deliberate, while a prolonged delay risks deepening the political vacuum, said Napon Jatusripitak, acting coordinator of the Thailand Studies Program at ISEAS-Yusof Ishak Institute. 'Thailand appears destined for a prolonged struggle to find a new prime minister and a political deadlock that could jeopardise the country's already fragile economic situation,' he said. Looming over everything is Thailand's influential military, which has led about a dozen coups since the kingdom's absolute monarchy was abolished in 1932 and has long been a key power broker in the country. The military and pro-military political parties were the key forces behind Paetongtarn's eventual ascension to power after a key opposition party couldn't secure enough support to form a government following national elections two years ago. That uneasy alliance paved the way for Paetongtarn's father, Thaksin Shinawatra, to return from a long exile. Even with the court's suspension, Paetongtarn isn't totally sidelined from power. Hours before the ruling yesterday, she was named culture minister in a reshuffle expected to keep her in government. The new cabinet will be sworn in tomorrow. But the damage may be permanent. A recent poll showed Paetongtarn's approval rating at 9.2%. Thousands have protested, calling for her resignation. Paetongtarn said yesterday she accepts the court's ruling but gave little clarity on her future. 'I'm still a Thai citizen,' she said. 'I will continue to work for the country while my duties are suspended.' Even so, fears are growing the government could collapse before the next budget passes. The 2026 fiscal plan, due by August, is at risk. Burin Adulwattana, chief economist at Kasikorn Research Center, said a lame-duck government would add uncertainty, hurting the baht and stocks. 'Big trouble' Thousands have protested in Thailand calling for the prime minister's resignation. (AP pic) 'A key impact will be felt if the political turmoil leads to a budget delay,' he said. 'Without it, the economy will have big trouble.' The baht fell 0.1% today. The yield on Thailand's benchmark 10-year bonds was little changed after declining three basis points a day earlier. The benchmark stock index, the world's worst-performing major equity market globally this year, rallied 1.9% yesterday on expectations that Paetongtarn's suspension will help reduce political tension. Whether things play out that way is far from certain. 'This suspension exerts further downside risk to a growth outlook already mired in uncertainty from US tariffs,' said Lavanya Venkateswaran an economist at Oversea-Chinese Banking Corp in Singapore. 'The real question is what next. That needs to be answered sooner rather than later considering the stakes.' Payong Srivanich, chairman of the private sector joint standing committee for commerce, industry and banking, said tariff talks with the US are likely to miss next week's July 9 deadline and that broader political uncertainty could affect budget spending. If the court ultimately rules against Paetongtarn, she will be removed from office, triggering a parliamentary vote to pick a replacement from a list submitted before the 2023 election. Along with her father and aunt, Yingluck, Paetongtarn would be the third of the Shinawatra clan to be removed from office. Potential replacements Possible successors include the Pheu Thai party's Chaikasem Nitisiri, Bhumjaithai's Anutin Charnvirakul, United Thai Nation's Pirapan Salirathavibhaga, and the Democrat Party's Jurin Laksanawisit. Former prime minister Prayuth Chan-ocha – who led the last coup – is also eligible. And while a military takeover is always possible in Thailand, frustration over the country's economic performance under Prayuth ultimately pressured his government to allow for elections. 'The decision by the court today has heightened the coup risk a bit,' said Thitinan of Chulalongkorn University. But 'the last time they had a coup, they did not do well'.
