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THAILAND: VIEW: JP Morgan Expects Another 75bp Of Easing In 2025

THAILAND
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The Bank of Thailand unexpectedly cut rates 25bp to 2.0% at its February meeting. While the October easing was meant to keep rates “consistent with economic potential”, this month’s was due to a deterioration in the economic outlook. JP Morgan believes that concern around growth will drive three more 25bp cuts this year with one in each quarter bringing rates to 1.25% by year end.

  • JP Morgan observes that “the BoT did, however, pare back expectations of further easing by stating that the lowered policy rate is “robust to risks going forward”.
  • It notes that BoT is monitoring “manufacturing production outlook, impact of major economies’ trade policies on economic outlook, and loans growth/credit quality and their implications for economic activities, all of which are GDP outlook-centric and broadly trending negatively.”
  • “The biggest difference between last October and this month’s rate cut decision is that the former was a one-off, recalibration of the neutral rate in response to structural issues while the latter is a pre-emptive move to address the negative growth outlook driven by prospective US tariff actions. In the October MPC statement, the lower policy rate was deemed “consistent with economic potential”. In this month’s statement, the lower policy rate is consistent with the “current assessment of the economic outlook.”
  • “The MPC statement made it abundantly clear that the BoT is increasingly concerned by the hawkish turn in US trade policy.”
  • “Despite leaving the 2025 GDP estimate of 2.9% unchanged (JPM: 2.2%), the BoT mentioned that the economy is projected to expand “slower than anticipated”.”
  • “Headline inflation in 2025 (BoT: 1.1% vs. JPM: 1.0%) is projected to stabilize around the lower bound of the 1-3% target range with downside risks, driven by an expected downtrend in oil prices and structural factors such as intense price competition from imported goods.”
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The Bank of Thailand unexpectedly cut rates 25bp to 2.0% at its February meeting. While the October easing was meant to keep rates “consistent with economic potential”, this month’s was due to a deterioration in the economic outlook. JP Morgan believes that concern around growth will drive three more 25bp cuts this year with one in each quarter bringing rates to 1.25% by year end.

  • JP Morgan observes that “the BoT did, however, pare back expectations of further easing by stating that the lowered policy rate is “robust to risks going forward”.
  • It notes that BoT is monitoring “manufacturing production outlook, impact of major economies’ trade policies on economic outlook, and loans growth/credit quality and their implications for economic activities, all of which are GDP outlook-centric and broadly trending negatively.”
  • “The biggest difference between last October and this month’s rate cut decision is that the former was a one-off, recalibration of the neutral rate in response to structural issues while the latter is a pre-emptive move to address the negative growth outlook driven by prospective US tariff actions. In the October MPC statement, the lower policy rate was deemed “consistent with economic potential”. In this month’s statement, the lower policy rate is consistent with the “current assessment of the economic outlook.”
  • “The MPC statement made it abundantly clear that the BoT is increasingly concerned by the hawkish turn in US trade policy.”
  • “Despite leaving the 2025 GDP estimate of 2.9% unchanged (JPM: 2.2%), the BoT mentioned that the economy is projected to expand “slower than anticipated”.”
  • “Headline inflation in 2025 (BoT: 1.1% vs. JPM: 1.0%) is projected to stabilize around the lower bound of the 1-3% target range with downside risks, driven by an expected downtrend in oil prices and structural factors such as intense price competition from imported goods.”