According to projections from the Bank of Thailand and market analysts, as the central bank grapples with faltering growth, external headwinds and limited inflationary pressure, the nation’s policy of monetary easing is likely to continue past the new year and into 2026, the Bangkok Post reports.

The policy rate now sits at 1.50%.

Analysts view the expected extension of easing as a tacit concession to structural constraints. As HSBC noted in a Reuters report: “Led by the new BoT Governor, we expect the BoT to deepen its easing cycle further, cutting the policy rate to 1.00% by 1Q 2026.”

The Bank’s internal forecasts appear to support this path given that it has maintained a growth outlook of 2.3% for 2025, with expectations of moderation thereafter the Post added.

A prolonged easing cycle carries risks for the Kingdom, however; one being that persistently low rates erode banks’ net interest margins, squeezing profitability in the financial sector. Another is that borrowers with weak credit profiles may then be encouraged into over-leverage, exacerbating asset quality concerns if growth does not rebound.

Moreover, on the back of external volatility such as shifts in global interest rates, changes in US tariff regimes, or aggressive monetary tightening abroad, this could blunt the transmission of domestic stimulus. As such, the central bank will need to monitor capital flows and currency pressures should the baht come under stress.

Policy credibility in Thailand is also at stake as sustained easing must be accompanied by clear communication to reassure markets that the central bank remains vigilant on financial stability and inflation risks.