Economists are projecting both the US Federal Reserve (Fed) and the Bank of Thailand (BoT) to keep interest rates unchanged at their first meetings of 2025 amid uncertainties, dismissing a recent call from US President Donald Trump for rates to be cut immediately.
Trump in Switzerland on Thursday told the World Economic Forum in Davos that he demands the world reduce interest rates and OPEC lowers oil prices.
"I'll demand that interest rates drop immediately. And likewise, they should be dropping all over the world," he said via video.
The US's Federal Open Market Committee (FOMC) will hold its first meeting this year on Tuesday and Wednesday while the Thai central bank's meeting on rates is scheduled for Feb 26.
Lalita Thienprasiddhi, head of macro research at Kasikorn Research Centre (K-Research), said the Fed is expected to maintain its policy rates at the Jan 29-29 meeting as headline inflation accelerated for three consecutive months to 2.9% in December last year while core inflation remained above 3%.
At the same time, the US labour market continues to be strong.
"The Fed is likely to keep the US rates untouched at 4.25-4.5% across the first quarter of 2025 amid uncertainties caused by Trump [2.0] policies that could potentially cause inflation to soar," she said.
Kanjana Chockpisansin, head of the centre's research, banking and financial sector, said the Thai central bank is projected to hold rates at its first two meetings scheduled for Feb 26 and March 12.
"We expect the Bank of Thailand to trim the rate again at its meeting in April," she told the Bangkok Post.
Kuala Lumpur-based Maybank shared a similar view, expecting the central bank to keep its policy rate steady at 2.25% on Feb 26, in view of "elevated external uncertainty and shifts in the Fed's anticipated policy trajectory".
As the government is under pressure to introduce additional economic stimulus measures, Maybank has maintained Thailand's GDP forecast at 2.8% this year, up slightly from a projected 2.6% in 2024, on the back of increased public investment and public consumption, "but remains on alert to downside risks", it added.
Given the sound US economy at present, Kitpon Praipaisarnkit, vice-president of UOB Kay Hian Securities (Thailand), sees the possibility of the Fed's first rates cuts in May or even June.
"I don't foresee any surprise in terms of rate cuts in the first half of the year," he said.
