By Kitiphong Thaichareon and Orathai Sriring
BANGKOK (Reuters) – Thailand’s central bank cut its key interest rate by 0.25% on Wednesday, bringing it to 2.25%. This is the first cut since May 2020 and comes after government pressure to support the economy.
The central bank stated that the new rate aligns with the economy’s growth potential and does not hinder debt reduction despite lower expected loan growth.
This unexpected decision caused the stock market to rise 1.6%, while the baht depreciated by 0.36%. Only four out of 28 economists had predicted this cut.
Assistant governor Sakkapop Panyanukul clarified that the rate adjustment was not due to political pressure but a recalibration of policy rates.
Economic challenges like floods, competition from cheap imports, and factory closures influenced this decision, according to analysts.
Additionally, the Bank of Thailand raised its 2024 economic growth forecast slightly to 2.7% and lowered its inflation forecast to 0.5%, below the target of 1% to 3%.
The central bank plans to meet again at the end of October to further discuss inflation targets.
($1 = 33.34 baht)
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