
The central bank's policy rate should not exceed 2%, aligning with the inflation target and Thailand's GDP growth, says the head of the government's planning unit.
Speaking at a seminar on the 2025 economic outlook hosted by Kiatnakin Phatra Financial Group on Tuesday, Supavud Saichuea, the chairman of the National Economic and Social Development Council, said given the Bank of Thailand's inflation target range of 1-3%, its policy rate should not exceed 2%, while the real policy rate should remain within the range of 0-1%, aligning with the country's GDP growth rate of less than 3%.
Between 2007 and 2014, both inflation and the real policy rate averaged 2%, while GDP growth was 3.5%.
Inflation in 2024 was 0.4%, and the central bank projects it will reach the lower bound of 1% by the end of this year. As a consequence, the average inflation level is expected to stabilise at 2%.
Under these circumstances, the central bank's policy rate could be lowered from its current level, Mr Supavud said.
"The central bank's robust monetary policy stance aims to preserve policy space in preparation for heightened uncertainties. However, if the Bank of Thailand waits for clearer economic signals before adjusting rates, it could harm the economy and fail to benefit borrowers," he said.
Mr Supavud if the central bank keeps its policy rate unchanged throughout the year, it could weaken the Thai economy in the second half based on rising global uncertainties, particularly new policies to be introduced by US president-elect Donald Trump.
"Given both internal and external factors, it will be challenging for Thai economic growth to reach the government target of 3% this year," he said.
Mr Supavud said the Trump 2.0 policies, particularly tariffs, are expected to intensify US-China trade tensions this year, contributing to greater global uncertainties.
Thailand is likely to be affected by these heightened tensions, especially exports in the second half of 2025. Therefore, both Thailand and local businesses should adapt strategies to address these challenges, he said.
Thailand is likely to benefit from trade and exports to China in certain areas amid the tensions, especially in the food and services sectors, said Mr Supavud. China continues to rely on a variety of imported goods from multiple countries as it remains a global manufacturing superpower.
Thailand's food exports to China are higher than those of its regional peers, he said.
Mr Supavud said the services sector, including tourism, remains a key contributor to Thailand's GDP.
Meanwhile, the government's investment in casino-based entertainment complexes could provide partial support for the country's tourism, investment and employment in the long term. However, the government should pay attention to social issues, he warned.