Thailand's central bank left its key interest rate unchanged on Wednesday, as expected, holding steady after two consecutive cuts as it seeks to preserve limited policy space amid trade uncertainty and renewed domestic political turmoil.
The Bank of Thailand's monetary policy committee voted 6 to 1 to hold the one-day repurchase rate (THCBIR=ECI) steady at 1.75%, the lowest in two years. The BOT had cut the rate by 25 basis points at reviews in February and April.
The BOT said economic growth was stronger than expected in the first half of the year, in part because of frontloading of export orders to beat U.S. tariffs, but said the outlook was uncertain and it was ready to adjust rates as needed. "The Thai economy is projected to slow down going forward, as a result of increasing risks to merchandise exports stemming from U.S. trade policies as well as geopolitics and domestic factors," it said in a statement.
The country faces a 36% U.S. tariff on its exports, a key driver of growth, if it fails to negotiate a reduction before a moratorium expires in July. A tariff of 10% has been set for most nations while the moratorium is in place.
The BOT said assuming Thailand negotiated an 18% tariff and the rate was 10% for other countries, then growth would be 2.3% this year and 1.7% in 2026.
The baht was largely unchanged against the U.S. dollar after the decision to hold rates steady, which had been expected by 21 of 33 economists in a Reuters poll.
Adding to the challenges is a new round of political turmoil that could bring down Prime Minister Paetongtarn Shinawatra or the coalition government led by her Pheu Thai party.
