The Monetary Policy Committee (MPC) was divided, voting 4 to 2 to cut the policy interest rate by 0.25%, against market expectations of a rate hold. The committee said it is time for monetary policy to support the economy during the 2–3 month interim before the new government assumes office. It also hopes to raise inflation, which remains below target, pressuring commercial banks to reduce loan interest rates and increase lending. Although the "ammunition" will be limited after this cut, the MPC emphasized there is still room for further reductions if necessary.
Don Nakornthap, Assistant Governor of the Bank of Thailand (BOT) responsible for monetary policy and secretary to the MPC, announced that the MPC voted 4 to 2 in favor of lowering the policy interest rate by 0.25% to 1.00% per annum, effective immediately. The dissenting minority preferred to keep the rate unchanged, citing ongoing uncertainties from the global economy, trade issues, and geopolitical risks.
Although Thailand's economy in Q4 2025 grew better than expected, leading to a possible upward revision of GDP growth for 2026 from 1.5% to about 2%, the MPC views future growth as still below potential due to structural problems, intense competition, slowing consumption, and a recovery concentrated mainly in the technology sector. Meanwhile, risks have increased from U.S. tax measures, delays in the 2027 budget, and a strong baht that pressures exporters.
"Although this rate cut came sooner than the market anticipated, it aims to accelerate recovery during a period when the government has yet to introduce stimulus measures. It also helps reduce debt burdens for SMEs and households amid a trend of potentially rising non-performing loans. Moreover, inflation in 2026 is at risk of being lower than expected, which may delay the return to the inflation target band until the latter half of 2027," the statement said.
Don said that following this rate cut, the monetary policy "ammunition" will naturally be reduced, but there remains room to preserve it for use if the economy worsens in the future. The MPC focuses on supporting economic recovery while ensuring inflation does not fall too low. Importantly, the policy also aims to reduce financial costs and ease debt burdens for businesses and households.