Economists at United Overseas Bank (UOB) have strengthened their case for imminent monetary policy easing by the Bank of Thailand, citing persistently low inflation, weakening domestic demand, and slowing GDP growth. Their comprehensive analysis, presented in March 2025, argues that Thailand's economy is at a critical juncture, creating what UOB describes as "a textbook case for accommodative policy."
The bank's multi-factor assessment framework highlights core inflation remaining below 1% for eight months, GDP growth projections revised downward to 2.7% for 2024, and contracting export growth of -1.2%. These indicators, alongside high household debt and manufacturing output declines, are seen as justification for preemptive rate cuts to support economic recovery momentum.
Concurrently, UOB has projected a gradual downside bias for the USD/THB exchange rate through 2025, forecasting the Thai baht to appreciate against the US dollar. This outlook is supported by Thailand's current account surplus, resilient tourism recovery—with arrivals at 85% of pre-pandemic levels—and the Bank of Thailand's relatively hawkish stance compared to a potentially dovish Federal Reserve. UOB projects the USD/THB could decline to a range of 34.30-34.80 by Q4 2025.
Market participants are increasingly anticipating policy adjustment, with currency markets pricing in approximately 50 basis points of easing. The analysis suggests that while the Bank of Thailand must balance financial stability concerns and high household debt, timely and calibrated rate cuts could help sustain economic recovery, with potential effects including lower borrowing costs and a moderately weaker baht.
