# SCB EIC Forecasts Two Additional Policy Rate Cuts to 1.25% by Year’s End

- Link: https://www.thailand-business-news.com/economics/218064-scb-eic-forecasts-two-additional-policy-rate-cuts-to-1-25-by-years-end
- Published: 2025-05-12T09:17:00+07:00
- Author: Economic Intelligence Center Siam Commercial Bank

**The MPC lowered Thailand’s policy rate to 1.75% due to a slowing economy and rising
trade risks. Two scenarios indicate weaker growth and subdued inflation, emphasizing
the need for accommodative monetary policy amid persistent global trade uncertainties.**

## Policy Rate Cut and Economic Outlook

The Monetary Policy Committee (MPC) voted 5 to 2 to reduce the policy rate by 0.25
percentage points to 1.75%, with two members favoring to keep it at 2.0%. This decision
reflects concerns over slowing Thai economy due to risks from U.S. trade policies,
retaliations by major economies, and lower than expected foreign tourist arrivals.
Headline inflation is anticipated to drop below the target range, and financial 
conditions remain tight. The MPC also warned that the ongoing trade war may cause
long-term structural changes to global trade and supply chains, increasing economic
uncertainty.

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## Scenario-Based Projections

Instead of a single baseline projection, the MPC presented two scenarios due to 
high uncertainty. The Reference Scenario assumes current U.S. tariffs, projecting
Thai economic growth at 2.0% in 2025 and 1.8% in 2026, with headline inflation of
0.5% and 0.8%. The Alternative Scenario assumes partial tariff imposition and a 
U.S. recession, forecasting slower growth of 1.3% and 1.0%, and lower inflation 
at 0.2% and 0.4%. Both scenarios suggest growth will significantly fall short of
earlier forecasts.

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## Accommodative Monetary Policy

The MPC emphasized the necessity for accommodative monetary policy to help businesses
and households adapt amid global trade tensions. They avoided labeling this rate
reduction as an “easing cycle,” differentiating it from sharp disruptions like the
Global Financial Crisis. The committee expressed readiness to adjust rates as needed,
marking a shift from maintaining a “neutral” stance, showing increased flexibility
in tackling evolving economic conditions.

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