BANGKOK, Oct 8 (Reuters) - Thailand's central bank left its key interest rate steady on Wednesday, surprising markets which had expected another cut as the economy struggles with a strengthening baht , negative inflation and U.S. tariffs.
The Bank of Thailand's monetary policy committee voted 5 to 2 to keep the one-day repurchase rate steady at 1.50%. The BOT has cut rates four times in the past year.
"The transmission of previous policy rate cuts to the economy is ongoing," the central bank said in a statement.
The BOT said it now expects the economy to grow 2.2% this year and 1.6% in 2026, slightly lower than previous forecasts of 2.3% and 1.7%, respectively. Last year's growth was 2.5%.
"The economy in the second half of 2025 throughout 2026 is expected to slow down due to the impacts of U.S. trade policies," the central bank said.
Only six of 26 economists in a Reuters poll had predicted rates would be kept steady at Wednesday's review, the first for new Governor Vitai Ratanakorn. Nineteen economists had predicted a 25 basis point cut, and one had forecast a 50 bps cut.
Among those who provided a longer-term outlook on rates in the poll, 13 of 21 economists expected the policy rate to be at 1.25% by the end of 2025. The remaining eight saw it at 1.00%.
The forecast for headline inflation this year was cut to zero, from 0.5% previously. The inflation rate has been negative for the past six months, well below the central bank's target range of 1% to 3%, but the BOT said deflationary risks were low.
The BOT said inflation was expected to be 0.5% in 2026, before it returns to the target range by early 2027.
Southeast Asia's second-largest economy has lagged peers as it struggles with U.S. tariffs, high household debt, weak consumption, and a strong currency.
On Tuesday, Finance Minister Ekniti Nitithanprapas said the government would spend 44 billion baht ($1.35 billion) on a consumer subsidy program and will roll out other stimulus measures to try to lift growth above 2.2% this year.
Prime Minister Anutin Charnvirakul's new government has a limited window to implement its measures, with the premier planning to dissolve parliament by the end of January with a general election to be held in March or early April
($1 = 32.51 baht)
Reporting by Orathai Sriring, Kitiphong Thaichareon and Chayut Setboonsarng; Editing by John Mair, David Stanway and Kim Coghill
Source: Reuters