As per a Bloomberg report on Tuesday, the Bank of Thailand (BOT) has asserted that its monetary policy is sufficiently robust to handle market fluctuations stemming from U.S. President Donald Trump’s new tariff actions against various trading partners.
Deputy Governor Piti Disyatat, a member of the seven-person Monetary Policy Committee, mentioned in a Bloomberg TV interview that the central bank’s recent rate cut is designed to be resilient against a range of scenarios, including heightened tariff tensions.
Piti believes the interest rate reduction to 2% should effectively manage both global and domestic economic repercussions. However, he noted that a significantly larger negative development might force a policy reassessment.
This came after Trump’s decision to increase tariffs on China to 20%, with the deputy governor pointing out that the major impact would arise from Trump’s initial 10% tariffs, while additional impacts from the subsequent 10% remain uncertain.
The unexpected rate cut last week, the second in four months, aimed to support the Thai economy following poor growth figures and pressure from Prime Minister Paetongtarn Shinawatra’s administration to lower borrowing costs and increase the inflation target to spur economic activity.
Although Thailand’s central bank has kept its GDP growth forecast at 2.9% for this year, officials now anticipate that the actual expansion might slightly exceed 2.5%. In 2024, Thailand’s GDP only saw a 2.5% increase, which fell short of economists’ predictions and was only about half the rate of growth recorded by neighboring Indonesia.
Standard Chartered economist Tim Leelahaphan described BOT’s tone as “neutral to dovish,” predicting economic forecasts might be lowered at the April meeting. He anticipates a rate cut to 1.75% by June, with a possibility of it happening as early as next month.
BOT Governor Sethaput Suthiwartnarueput views managing global trade policy impacts, especially supply-chain disruptions, as a key challenge. Echoing these concerns, the deputy governor warned of increased imports if trade tensions escalate, affecting Thailand indirectly due to its role in China’s supply chain. The central bank is particularly attentive to the manufacturing sector, including automakers.
In response to economic pressures, the Thai government has highlighted the need for a competitive baht to boost growth beyond 3%. Despite the baht appreciating over 5% against the US dollar in the past 12 months—potentially impacting exports and tourism—the central bank sees this as reflecting Thailand’s economic fundamentals. However, it remains cautious of any destabilizing currency volatility.
Meanwhile, an ongoing debate exists between the government and central bank over economic growth strategies, including monetary policy and inflation targets.
Thailand is preparing to appoint Somchai Sujjapongse, a former bureaucrat, as the new chairman of the Bank of Thailand. His selection comes as a diplomatic solution following opposition to the initial nominee, Kittiratt Na-Ranong, who faced criticism due to perceived political affiliations.
Piti expressed satisfaction with the outcome of the selection process and anticipates a productive partnership with Somchai, citing a history of strong collaboration.
