Economists split over BoT rate decision
Amonthep Chawla, chief economist at CIMB Thai Bank, said he expects a rate cut of 25 basis points (bps) to 1.50% at the meeting.
He said the economic signals are weak, inflation is below the central bank's target range and loans are contracting -- all supporting the case for a policy rate cut. Although the US reduced its tariff on Thai exports to 19% from 36%, uncertainties persist, particularly regarding transshipment tariffs.
"In the face of persistent challenges, lowering the policy rate is a reasonable step to support the economy," said Mr Amonthep, warning that Thailand could face stagnation from the fourth quarter of this year through the first quarter of 2026.
Economic stagnation is a prolonged period of slow or no economic growth, often measured by low GDP growth and typically accompanied by high unemployment. This stage is characterised by stagnant wages, weak consumer demand, declining productivity and limited innovation.
SCB Economic Intelligence Center (EIC), the research unit of Siam Commercial Bank, also forecasts a cut of 25 bps at the meeting, followed by another reduction in December, putting the policy rate at 1.25% by year-end.
Thitima Chucherd, head of economic and financial market research at EIC, said despite the tariff reduction, the Thai economy will continue to face uncertainties and challenges. However, the 19% tariff rate is expected to support exports.
EIC plans to revise its export forecast for this year from a contraction to marginal growth. The unit also intends to raise its GDP growth projections for 2025 and 2026 to roughly 2%, up from the current estimates of 1.5% and 1.4%, respectively.
Kasikorn Research Center (K-Research), however, expects the central bank to keep the rate unchanged at 1.75% on Wednesday, noting the regulator has already lowered the rate by 50 bps since the start of the year.
Nattaporn Triratanasirikul, deputy managing director at K-Research, said Thai GDP is likely to grow by nearly 3% year-on-year in the second quarter.
The US tariff rate reduction should help to sustain export momentum and economic growth, with the research unit upgrading its 2025 GDP growth forecast from 1.4% to 1.5%, while its export projection was revised from a 7.4% contraction to 3.4% growth.
Still, headwinds remain for the second half of the year, including ongoing uncertainty over US tariffs, especially transshipment penalties, a possible decline in foreign tourist arrivals and tensions between Thailand and Cambodia, according to K-Research. These challenges suggest the economy will require more support in the final quarter, she said.
"We expect the central bank to cut its policy rate one or two more times in October and December, bringing it down to either 1.5% or 1.25% by year-end," Ms Nattaporn said.
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