Bangkok: The Monetary Policy Committee (MPC) has decided to maintain the policy interest rate at 1.75% per annum, a move aimed at sustaining long-term economic stability amidst a slowly expanding economy and controlled inflation levels.
According to Thai News Agency, Mr. Sakkapop Panyanukul, Secretary of the MPC, announced the decision following the Monetary Policy Committee meeting No. 3/2025, held on 25 June 2025. The committee voted 6 to 1 in favor of maintaining the current rate, with one member suggesting a 0.25% reduction to alleviate financial burdens on vulnerable groups during the economic slowdown.
The Thai economy showed promising growth in the first half of 2025, with the manufacturing sector contributing to a better-than-expected GDP growth of 3.1% in the first quarter. However, the MPC anticipates a slowdown in the latter half of the year and into 2026 due to trade pressures, weak demand, and various uncertainties. The committee forecasts an economic expansion of 2.3% for 2025, slowing to 1.7% in 2026, with sluggish export trends posing significant risks.
The ongoing US trade policies continue to impact Thailand's export sector, with US import tariffs on Thai products projected at 18%, potentially higher than those for some competing countries. Additionally, tensions along the Thai-Cambodian border have been noted, but are not expected to significantly impact the overall economy at this juncture.
Inflation remains low, driven by supply-side factors like energy and fresh food prices, yet the cost of living remains high for the populace. Demand for loans has declined, particularly among high-risk groups, as indicated by rising non-performing loans in housing and SME sectors. While monetary policy remains accommodative to support recovery, the economy's fragile fundamentals necessitate careful timing and effective policy measures.
Tourism recovery remains a concern, with the number of Chinese tourists falling short of expectations. While long-haul tourists spend more per capita, they have not fully offset the decline, leading to a revised tourist forecast of 35 million for this year and 38 million for the next.
The MPC also highlights challenges from oversupply and low-priced imports, which have severely impacted small entrepreneurs, especially in the food and service sectors. The Committee suggests implementing measures to prevent dumping and support domestic production costs, ensuring fair competition and preventing stimulus measures from benefiting imported products instead of bolstering the Thai economy.
The Bank of Thailand is committed to closely monitoring economic and financial developments, implementing policies aligned with current situations, and considering all risks to ensure long-term economic stability.