The Bank of Thailand’s Monetary Policy Committee, during its meeting on 16 October 2024, voted 5 to 2 to cut the policy rate by 0.25 percentage points from 2.50 to 2.25 percent, effective immediately.  

Mr. Sakkapop Panyanukul, Secretary of the Monetary Policy Committee, said that the overall Thai economy is projected to expand as anticipated. Headline Inflation is likely to gradually return toward the target range by the end of 2024. The deleveraging process is expected to continue. 

The committee deems that a neutral stance of policy rate remains appropriate with the economic growth and inflation outlook. Most members thus voted to cut the policy rate by 0.25 percentage points to alleviate debt-servicing burden for borrowers. Moreover, the lower policy rate would not impede debt deleveraging, given the expected slowdown in loan growth, and would remain neutral and consistent with economic potential. 

Two members voted to maintain the policy interest rate, deeming that it is consistent with the economic and inflation outlook, and to stress the importance of long-term macro-financial stability, as well as to preserve policy space amid ongoing uncertainties.

The Thai economy is projected to expand at rates close to the previous assessment of 2.7 and 2.9 percent in 2024 and 2025, respectively. The main drivers are tourism, private consumption that is further supported by government stimulus measures, and improvement in exports, given higher demand for electronics. 

However, the recovery has been uneven across sectors, with certain merchandise exports, manufacturing production, and SMEs facing pressure from structural impediments.

Headline inflation is projected at 0.5 and 1.2 percent for 2024 and 2025, respectively. Raw food inflation is likely to rise due to volatile weather conditions, while energy inflation is expected to increase because of the base effect. Core inflation is forecast at 0.5 percent and 0.9 percent in 2024 and 2025, respectively, and is expected to remain low due partly to structural factors such as heightened competition from imported goods. Medium-term inflation expectations remain consistent with the target. Headline inflation is anticipated to gradually return to the target range by the end of 2024.