Thai Banks Cut Lending Rates in Response to Central Bank Action

Commercial and state-owned banks follow MPC's unanimous decision to lower policy rate, aiming to ease financial burden on consumers and businesses

 

Thailand's leading commercial and state-owned banks have announced cuts to their lending rates, following the Monetary Policy Committee's (MPC) unanimous decision yesterday to lower the policy rate.

 

On 13 August, the MPC reduced the policy rate by 0.25 percentage points, from 1.75% to 1.50%.

 

This was done to make financial conditions more favourable for businesses and vulnerable households grappling with a fragile economy, which has been impacted by new US trade measures and structural challenges.

 

In response, several major banks, including Krungthai Bank, Bangkok Bank, Kasikornbank, Siam Commercial Bank, and Krungsri, swiftly announced reductions of 0.25% to their Minimum Loan Rate (MLR), Minimum Overdraft Rate (MOR), and Minimum Retail Rate (MRR).

 

The cuts are effective as early as today and will take effect at other banks in the coming days.
  

Payong Srivanich, ยresident of Krungthai Bank, described the economic situation as a "perfect storm" of global trade shifts, a large informal economy, and high household debt.

 

He stated that the rate cut would help all customer groups, especially freelancers and SMEs, to navigate this challenging environment.

 

Similarly, Krungsri's ยresident and CEO Kenichi Yamato noted that the move was aimed at "fostering a financial environment conducive to business adaptation" and alleviating debt burdens.

 

The state-owned Government Savings Bank (GSB) and the Government Housing Bank (GHB) also joined the effort, with GHB's President, Kamonpop Weerapala, noting that its new MRR of 6.245% per annum is the lowest in the market.


  

However, economists remain cautious about the long-term impact.

 

Watcharaporn Kantaphayao of BLS Wealth Research believes the MPC may need to cut rates again later this year to counter a significant slowdown.

 

Analysts at Yuanta Securities noted that while the rate cut provides a positive boost, banks' net interest margins (NIM) may be squeezed, though they are expected to compensate with non-interest income.

(2025/08/14-00:00)