The Bank of Thailand reduced its policy interest rate by 25 basis points to 1.25% on 17 December 2025, with the Monetary Policy Committee voting unanimously in favour of the move. The BoT said the cut was consistent with the committee's assessment of the current economic outlook.
The central bank projected that the Thai economy would expand 2.2% in 2025. Officials indicated that the reduction in borrowing costs was intended to provide additional impetus to domestic demand and to ensure that financing conditions across the private sector remained supportive of investment and consumption. The BoT said it would continue to monitor data closely and stood ready to adjust policy as the economic and inflation outlook evolved.
INFLATION AND GROWTH OUTLOOK
Thailand's monetary policy framework targets headline inflation within a band of one to three per cent. Headline inflation was below that range for much of 2025; the BoT projected -0.1% for the year and a return to the target range only by the first half of 2027. Tourism had been weighed on by a decrease in short-haul tourists, although the BoT expected a gradual recovery.
GROWTH PROJECTIONS
The central bank reiterated that it retained the flexibility to adjust policy in either direction depending on how the domestic and global environment developed, and projected growth of 1.5% in 2026 and 2.3% in 2027, warning that merchandise exports would be affected by US tariffs.