The Bank of Thailand is expected to reduce its key policy rate by 25 basis points on October 8 to 1.25 percent. This move is seen as a response to signs of economic weakness: exports have chilled, tourism recovery has lagged, and inflation has remained very low. In a poll of economists conducted between September 29 and October 6, over 70 percent projected the easing. The strong Thai baht is also weighing on trade competitiveness, which has pressured export earnings.
The current policy rate stands at 1.50 percent. A more dovish stance under Governor Vitai Ratanakorn is believed to support further easing. Some economists caution that another cut so soon might limit future monetary policy room. Projections suggest rates could drop further to 1.00 percent by March 2026 and then remain stable for the rest of 2026.
Growth for Thailand in 2025 is forecasted at about 2.0 percent, with 2026 growth at 1.8 percent. Inflation is expected to remain very low, at 0.1 percent in 2025 and 0.6 percent in 2026. A stronger rebound is anticipated in the latter half of 2026, supported by likely fiscal stimulus from the new government. The rate cut is being closely watched by investors, who are gauging whether the move can rejuvenate domestic demand without stoking financial risks.
If the cut is enacted, it will be interpreted as a decisive step to stabilize growth. Policymakers are hoping that lower borrowing costs can spur investment and consumption. The balance will be delicate: too aggressive easing could unsettle financial markets.
