Bank of Thailand Unexpectedly Cuts Rate to 1% in Second Consecutive Easing Measure

TradingKey - The Bank of Thailand (BOT) has lowered its policy interest rate to 1.00%, the lowest level since September 2022. This marks the institution's second consecutive easing measure to support economic recovery and address the pain points of sluggish domestic growth and elevated deflationary risks.

The Bank of Thailand's Monetary Policy Committee voted 4-2 to support a rate cut at its first meeting of the year. Two members voted to keep the original rate unchanged.

This rate cut is a reactive response to the dual pressures facing the Thai economy. In terms of economic growth, Thailand's GDP growth is projected to be 2.0% in 2025, while the KASIKORN Research Center predicts it will further slow to 1.6% in 2026, with an uncertain export outlook and weak domestic demand serving as the primary drags.

More critically, deflationary risks continue to accumulate; Thailand's inflation rate has been in negative territory for ten consecutive months, reaching -0.66% in January 2026, which is far below the central bank's target range of 1%-3%.

As an economy with an export dependency of over 60%, Thailand's exports and economic trends are closely linked to this rate cut. From an export perspective, the rate cut will lead to the depreciation of the Thai baht, making Thai export commodities such as electronics, rubber products, and agricultural goods more price-competitive in global markets. This is expected to hedge against the risk of a potential 1.2% contraction in 2026 exports, providing support particularly for small and medium-sized exporters that rely on price advantages.

For exporters and foreign tourists, the depreciation of the baht is positive news, as exporters can capture market share with more advantageous pricing and the cost of spending for tourists in Thailand will decrease. However, for the general public, the prices of imported goods (such as oil, electronics, and luxury items) may rise, pushing up the cost of living.

This rate cut by the Bank of Thailand is a typical microcosm of emerging market economies responding to economic pressure, reflecting the policy maneuvering and developmental challenges of emerging nations under the adjustment of the global monetary environment.