In an unexpected turn of events, Thailand’s central bank, the Bank of Thailand (BOT), decided to lower its key interest rate during a policy review on Wednesday. This move, which has been advocated for by the government to stimulate a sluggish economy facing below-target inflation, marks a significant shift in monetary policy.
The BOT’s monetary policy committee, with a 5 to 2 vote, opted to decrease the one-day repurchase rate by 25 basis points to 2.25%. This adjustment comes after maintaining a decade-high rate of 2.50% since September 2023.
The decision to cut the interest rate caught many by surprise, as only four out of 28 economists surveyed by Reuters had anticipated a quarter-point reduction this week. Conversely, the majority of economists, numbering twenty-four, had expected no alterations to the existing policy.
The last modification in policy occurred in September of the preceding year when there was a 25 basis point increase in the interest rate. The recent rate cut reflects the BOT’s proactive approach to addressing economic challenges and fostering growth in the face of prevailing economic conditions.
