Krungsri Bank reports that the Thai baht weakened slightly after the Monetary Policy Committee announced an interest rate cut.

The Global Markets Group of Bank of Ayutthaya Public Company Limited (Krungsri) announced the results of the Monetary Policy Committee (MPC) meeting, where the Bank of Thailand (BOT) resolved to reduce the policy interest rate by 0.25% per year, bringing it to 1.00% per year.

February 25, 2026: The Monetary Policy Committee (MPC) assessed that economic growth in the fourth quarter of 2025 will be higher than previously forecast. However, growth is likely to remain below potential in 2026 and 2027 and will be uneven across sectors, reflecting structural problems and increased competition. Although exports and private investment are expected to perform better than previously estimated, they remain concentrated in the technology sector and generate less added value to the economy than they should. Meanwhile, private consumption is expected to slow down from 2025.

The Monetary Policy Committee (MPC) stated that it is necessary to monitor uncertainties related to US tax measures, delays in the 2570 budget, and the adjustments faced by SMEs, which continue to face pressure from increased competition, limited access to credit, and the appreciation of the Thai baht. Regarding price pressures, the downside risk to headline inflation in 2569 and 2570 has increased compared to previous assessments. Headline inflation is now expected to gradually return to the target range in the second half of 2570, instead of the first half of 2570 as previously projected.

Krungsri Global Markets reported that the Thai baht weakened to around 31.05 baht/dollar following the announcement of the Monetary Policy Committee's (MPC) interest rate cut. The MPC stated that the strengthening baht had tightened financial conditions for exporters and expressed concern about currency movements that did not align with economic fundamentals.

The next Monetary Policy Committee (MPC) meeting will be held on April 29. This interest rate cut came as a surprise to most market participants in terms of timing, especially after the National Economic and Social Development Council (NESDC) reported the latest GDP figures and investors had expectations regarding political stability.

However, the Monetary Policy Committee (MPC) stated that the current policy interest rate reflects a sufficiently accommodative monetary policy and is consistent with economic trends. Furthermore, it facilitates the gradual return of inflation to the target range in the medium term. Therefore, we believe that, barring any significant negative factors in the near future, the likelihood of further interest rate cuts by the MPC is quite limited.

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