A further reduction in Thailand’s policy interest rate will help shore up low inflation and ease the burden for local borrowers, according to the International Monetary Fund (IMF).
In a statement on February 21, the organisation welcomed the Bank of Thailand (BoT)’s decision in October to cut the policy rate and recommended a further reduction to support inflation and improve borrowers’ debt-servicing capacity.
Thailand’s household liabilities have ballooned to US$486 billion from around $400 billion in early 2019.
Earlier, Prime Minister Paetongtarn Shinawatra appealed for a rate cut after last year’s 2.5 per cent growth came below economists’ estimates.
Given remaining high uncertainty in the outlook, the authorities should stand ready to adjust their monetary policy stance in a data and outlook-dependent manner, the IMF said.
The BoT kept the policy rate steady at 2.25 per cent in December after a surprise quarter-point cut in October. Its Monetary Policy Committee is due to meet on February 26 to review the interest rate.
The IMF maintained its 2025 GDP growth projection for Thailand at 2.9 per cent. Risks are tilted to the downside amid escalating global trade tensions, increased commodity price volatility and local private sector debt overhang, it added.
