Minutes from the Bank of Thailand’s February meeting showed that a majority of committee members supported a policy rate cut to maintain accommodative financial conditions, support the economic recovery, ease debt burdens for SMEs and households, and anchor medium-term inflation expectations amid rising downside risks. Two members, however, argued that the current 1.25% policy rate remained appropriate, emphasizing that the effects of earlier rate reductions were still working their way through the economy.
The committee highlighted additional downside risks to headline inflation, noting it could return to the target range more slowly than previously anticipated. This was attributed primarily to falling energy prices and potential government measures, while demand-driven inflation pressures remained limited given that growth continues to run below potential.
Despite the economy expanding faster than expected, the recovery was uneven across sectors, held back by structural constraints and intensifying competition. Credit continued to contract, SME loan quality deteriorated, and liquidity conditions stayed tight, reflecting restricted access to financing and a stronger baht.
