The BOT said it now expects the economy to grow 2.2% this year and 1.6% in 2026, slightly lower than previous forecasts of 2.3% and 1.7%, respectively. Last year’s growth was 2.5%. “The economy in the second half of 2025 throughout 2026 is expected to slow down due to the impacts of US trade policies,” the central bank said.
Only six of 26 economists in a Reuters poll had predicted rates would be kept steady at Wednesday’s review, the first for new Governor Vitai Ratanakorn. Nineteen economists had predicted a 25 basis point cut, and one had forecast a 50 basis point cut.
Among those who provided a longer-term outlook on rates in the poll, 13 of 21 economists expected the policy rate to be at 1.25% by the end of 2025. The remaining eight saw it at 1.00%.The forecast for headline inflation this year was cut to zero, from 0.5% previously. The inflation rate has been negative for the past six months, well below the central bank’s target range of 1% to 3%, but the BOT said deflationary risks were low.
The BOT said inflation was expected to be 0.5% in 2026, before it returns to the target range by early 2027. Southeast Asia’s second-largest economy has lagged its peers as it struggles with US tariffs, high household debt, weak consumption, and a strong currency.
On Tuesday, Finance Minister Ekniti Nitithanprapas said the government would spend 44 billion baht ($1.35 billion) on a consumer subsidy program and would roll out other stimulus measures to try to lift growth above 2.2% this year.
Prime Minister Anutin Charnvirakul’s new government has a limited window to implement its measures, with the premier planning to dissolve parliament by the end of January with a general election to be held in March or early April.
Read Also: PN Gadgil Q2 Update | Silver leads growth; E-commerce segment grows over 100%
