Citibank predicts another interest-rate cut later this year

Policy rate likely to be cut again in second half of year from 2.0% to 1.75%, economist says

An economist at Citibank predicted that the Bank of Thailand (BOT) would reduce the policy interest rate again in the second half of this year, specifically in August, from 2.0% to 1.75%.

The move would help increase the Thai economy’s resilience against risks in the rest of 2025 and prevent inflation from falling below the target for a second consecutive year, Nalin Chutchotitham, an economist for Thailand and the Philippines at Citi Thailand, said on Tuesday.

On February 26, the BOT's Monetary Policy Committee (MPC) reduced the policy interest rate by 25 basis points, from 2.25% to 2% per annum. The committee said the move aims to stimulate growth, manage inflation, and support financial stability amid global competition and domestic challenges.“The rate adjustment will happen after April onward as the MPC sees that the current rate is enough for the future uncertainty,” Nalin said.

“Another 25-basis-point cut is likely to be announced in August if the economic expansion in the first half of the year is lower than expected.”

Nalin added that other factors that could prompt a rate cut are the intensifying protectionist policies of the United States, a lower-than-expected inflation rate, and higher risks in the loan markets.

However, with the high ratio of household debt to gross domestic product (GDP), at nearly 89% in the fourth quarter of 2024, reducing the policy rate beyond 1.75% may face limitations, she noted.

Thailand’s household debt was below 85% of GDP when the policy rate was at 1.5% in 2015 and 2019.

(2025/03/11-00:00)