PUBLISHED: 21 Feb 2025 at 11:02
The International Monetary Fund (IMF) has indicated that a further reduction in Thailand’s policy interest rate could bolster low inflation and alleviate financial pressures for local borrowers.
The IMF expressed support for the Bank of Thailand’s decision in October to lower the policy rate and advised a subsequent cut to aid inflation control and enhance debt-servicing capabilities for borrowers. Notably, Thailand’s household liabilities have surged to $486 billion, up from approximately $400 billion in early 2019.
This recommendation from the IMF coincides with Prime Minister Paetongtarn Shinawatra’s push for a rate cut, following last year’s economic growth of 2.5%, which fell short of expectations. The Bank of Thailand’s Monetary Policy Committee is scheduled to convene on Wednesday to assess the interest rate.
The IMF stated, “In light of ongoing high uncertainty, the authorities should be prepared to adjust their monetary policy based on incoming data and outlook changes.”
After deciding to maintain the policy rate at 2.25% in December following an unexpected quarter-point cut in October, the Bank of Thailand is anticipated to keep rates unchanged again, according to 10 out of 13 economists surveyed.
The IMF has retained its 2025 GDP growth forecast for Thailand at 2.9%, although it cautioned that risks are skewed negatively due to rising global trade tensions, increased commodity price fluctuations, and the burden of local private sector debt.
