Surprise 25 bps rate cut aims to reignite economic growth
The Bank of Thailand (BoT) cut the Overnight Repurchase Rate by 25 basis points (bps), bringing it to 2.25%, surprising both market and house expectations.
- The Monetary Policy Committee (MPC) voted 5-2 in favour of this policy rate cut, marking the first cut since May 2020.
- BoT statement: It expected inflation to gradually return towards the target range by the end of 2024, stating that “the committee deems that a neutral stance of the policy rate remains appropriate with the economic growth and inflation outlook.” The gradual pace of inflation moving toward the target has led the BoT to recalibrate its monetary policy strategy. It also highlighted the weak performance of the economy, which has been aggravated by high debt servicing costs for borrowers. The lower rate may alleviate financial pressure on businesses facing rising expenses, particularly due to the recent strengthening of the local currency.
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