(Bloomberg) -- Thailand’s central bank signaled that it won’t rush to further reduce borrowing costs after Wednesday’s unexpected rate cut, opting to preserve its limited fire power as global uncertainties rise.
Most Read from Bloomberg
-
NYC’s Congestion Pricing Pulls In $48.6 Million in First Month
-
The Trump Administration Takes Aim at Transportation Research
-
New York’s Congestion Pricing Plan Faces Another Legal Showdown
-
Shelters Await Billions in Federal Money for Homelessness Providers
“Our policy space is not much,” Assistant Governor Sakkapop Panyanukul said at a press conference in Bangkok after the Monetary Policy Committee decided to lower the one-day repurchase rate by a quarter point to 2%, which he said represented a “neutral” level. “The bar will be high next time,” Sakkapop said.
That stance could mean today’s cut delivers a temporary truce with the administration of Prime Minister Paetongtarn Shinawatra, which has pushed for lower rates and a higher inflation target to energize the sluggish economy. While rates remain close to a decade-high, Sakkapop said the latest move is sufficient to cope with the challenges ahead, including uncertainties from US tariff policies.
But the government has the opportunity of replacing Governor Sethaput Suthiwartnarueput, a staunch advocate for the central bank’s independence, when his term ends at the end of September.
“We expect more easing later this year,” said Bloomberg Economics’ Tamara Henderson. “An upcoming leadership change at the BOT may bring a new governor with a more dovish policy bias.” The next rate meeting will be on April 30.
Stocks gained, while the baht initially dropped before paring losses to be little changed. The move was predicted by just six of 23 economists surveyed by Bloomberg News, and was the first reduction in four months and only the second since May 2020.
Read: Baht Strength to Face Headwinds With BOT Rate Cuts, Analysts Say
While the BOT didn’t officially revise its prediction of 2.9% growth this year, Sakkapop said the central bank now sees an expansion of just over 2.5%. Indeed, data last week showed Southeast Asia’s largest economy grew just 2.5% in 2024, less than economist estimates and half the pace of neighboring Indonesia.
“The Thai economy is expected to expand at a slower pace than previously estimated due to the industrial sector being pressured by structural problems and competition from foreign products, as well as higher risks from trade policies of major economies,” the central bank said in a statement. That’s “even though the economy is supported by domestic demand and tourism.”