Bank of Thailand Unexpectedly Lowers Key Rate to 1%

2026-02-25 07:11 By Judith Sib-at 1 min. read

The Bank of Thailand cut its benchmark interest rate by 25 bps to 1% at its February 2026 meeting, defying market expectations of a hold.

The Committee voted 4-2 in favor of the cut.

This marked the second consecutive reduction and the lowest level since September 2022, as the central bank seeks to support economic recovery, ease debt burdens for SMEs and households, and anchor medium-term inflation expectations.

While economic growth in Q4 of 2025 was stronger than previously estimated, activity is expected to remain below potential in 2026 and 2027 and uneven across sectors, reflecting structural constraints and intensifying competition.

In addition, downside risks to inflation are expected to increase compared with earlier assessments due to falling energy prices, possible additional government measures, and subdued demand.

Inflation is now projected to return to the target range later than previously assessed, shifting from the first half of 2027 to the second half.



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