Bank of Thailand Stays at 1% as Fed Hike Odds Weigh on Bitcoin

A central bank that won't move

The Bank of Thailand's policy rate is still 1.00%. Over the past month its officials have argued that leaving it there is the right call, even though the US Federal Reserve has started raising rates again. The Monetary Policy Committee voted unanimously in August to keep the one-day repurchase rate at 1%, its third hold in a row, and pointed to growth that it called weak and uneven.21 The next review is October 28.23

On October 8, Governor Vitai Ratanakorn gave the clearest signal yet of what to expect. He told a business forum there is no rush to raise rates, and that monetary policy cannot fix the structural problems holding back Thai growth.29 He kept the bank's 2026 growth forecast at about 2.3%, driven by investment. He also cut the inflation outlook: prices are now expected to rise about 2% this year, down from the 2.8% the bank forecast in June.29 Headline inflation averaged 1.54% over the first nine months of 2026, inside the bank's 1%–3% target range.29

What stands out is the contrast with the Fed. Washington is tightening because of inflation. Bangkok is holding because, by its own measures, inflation is not the problem. Thailand's problem is growth.

How Thailand got to 1%

The low rate is the end of an easing cycle that was shallow by global standards. The Bank of Thailand cut six times between October 2024 and February 2026, 150 basis points in all. The aim was to support an economy held back by weak domestic demand and household debt that is among the highest in Asia.2330 Before that, the rate had reached 2.50% in September 2023.24

The latest cut was not unanimous. The February 25 reduction passed by a split vote, and the April, June and August holds were unanimous.27 The August minutes show the committee is wary of going further. Members said there was still room to ease, but that more cuts outside a crisis might bring little benefit compared with the side effects.21 Put simply, the bank thinks it has done most of what it usefully can.

Assistant Governor Don Nakornthab told Reuters in September that policy was "very, very accommodative." He called the 1% rate one of the lowest in the world and said the economy needs it to recover.30 He also said the bank would keep its June forecasts of 2.3% growth this year and 1.8% next year until the October meeting, when new projections are due.30 Growth slowed to 1.9% in the second quarter from 2.8% in the first.28

Hold, cut or hike: forecasts differ

Most analysts expect another hold, but they disagree about what comes after it. Standard Chartered economist Tim Leelahaphan expects the bank to stay at 1.0% through the rest of 2026 and all of 2027, even if the Fed hikes again and Thai inflation keeps rising.22 He sees the risks as lopsided: any hikes would probably be slow, while cuts could come quickly if domestic growth fell sharply.22

Don was less definite in September. He said the October meeting could still produce either a cut or a hike, depending on how conditions develop.28 Trading Economics' models expect 1% to last through 2027 and then rise toward 1.50% in 2028.21

The inflation data explain much of this disagreement. FXMacroData puts August headline inflation at 2.53% and core inflation at 1.44%. On those numbers the real policy rate is about −1.53 percentage points, after staying positive during the deflation that ran from April 2025 to March 2026.24 A negative real rate is what gives the case for a hike some weight. Vitai's forecast that inflation will slow to about 2% is meant to answer it.29

There is a new risk as well. Flooding has spread beyond Bangkok, and Vitai said the damage has lasted longer and spread wider than first thought.2529 The bank has not yet estimated the effect on GDP. That makes a hike before the October meeting even less likely, and gives the doves a reason to argue for support.

The Fed is moving the other way

The Fed's turn is what makes Thailand's position unusual. On September 16 the FOMC raised its target range by a quarter point to 3.75%–4.00%, its first hike in more than three years, by a 12–0 vote.79 Chair Kevin Warsh said inflation "is too high and has been for too long."9 Minutes released October 7 showed most participants thought another increase would probably be appropriate by the end of the year.1

Markets expect the Fed to wait until December rather than hike again in October. As of October 9, futures and prediction markets put the chance of an October hike at only 16%–18%, and the chance of a hike by December at 75%–85%.1 Of 14 brokerages surveyed, 13 expected a hold this month.1 The shift came after September payrolls rose by only 29,000. Fed Governor Christopher Waller also said future hikes do not need to come at consecutive meetings.1

The Fed and the Bank of Thailand both announce decisions on October 28.123 Warsh is also due in Bangkok on October 15 alongside the IMF's Kristalina Georgieva.1 On the same day, Thailand will be signalling patience while the Fed keeps the door open to more tightening.

The baht is taking the pressure

The currency is where these two policy paths collide. Commerzbank put the gap between 10-year US Treasury and Thai government bond yields at 291 basis points on October 7, the widest in a year.27 MUFG expects the dollar to reach 34.00 baht by year-end, against a Bank of Thailand reference rate of 33.6410 on October 8. It cites worsening terms of trade, weak growth, low rates and continuing portfolio outflows.27

The central bank does not appear concerned. Reuters reported the baht was down 5.7% against the dollar this year as of mid-September. Don said he was "quite happy" with a weaker currency as long as the moves stay orderly.28 The baht's fall has also been smaller than the scale of the rate cuts might suggest. FXMacroData notes the dollar bought about 32.59 baht in early October 2024 and about 33.59 two years later, despite 150 basis points of cuts.24 In effect, the bank is relying on a weaker baht to help exports, while the wider rate gap with the US limits how far it can cut.

Bitcoin is reacting to the Fed, not Bangkok

Crypto traders are watching the Fed far more than any Asian central bank. Bitcoin fell below $81,000 on October 8, touching about $80,922. That was a drop of almost 3% in a day and about 4% over the week, as oil rose and Fed officials sounded more hawkish.17 Bitcoin Magazine linked the oil spike, which followed new attacks on tankers in the Strait of Hormuz, to higher odds of Fed tightening and weaker demand for risk assets.1217

By the weekend the drop had partly reversed. CryptoTicker put bitcoin at $82,922 on Sunday morning, down 2.1% for the week. Ether, XRP and Solana fell much more.15 Bitcoin edged up to about $83,593 on Monday as oil fell on hopes of a Russia-Ukraine ceasefire. Outflows from US spot ETFs had added pressure the week before.20 CoinDesk described the price swinging between $81,000 and $84,000 ahead of Thursday's US CPI report.16

Coverage disagrees on how much rates matter for bitcoin. Some outlets note that bitcoin rallied about 30% in the weeks around the September hike, which suggests it can rise even while the Fed tightens.1317 Others point to the stronger dollar and rising Treasury yields to explain the recent weakness.19 The two views fit together: bitcoin can ignore a single hike, but it struggles when the dollar strengthens and yields stay high for weeks. The coin is still more than 30% below its October 2025 record of $126,080.17

What to watch

In our view, the Bank of Thailand will most likely hold at 1% on October 28, and the bigger news will be its new forecasts. Lower inflation projections and a growth estimate that includes flood damage would support the governor's view that there is no urgency. The risk is that the Fed signals clearly for December. That could widen the rate gap, weaken the baht beyond 34 and test how comfortable Bangkok really is with a weaker currency. For bitcoin, the Fed's December guidance and US CPI data matter much more than anything decided in Bangkok.