Despite sub-target inflation and a sluggish economy facing hurdles posed by US import tariffs, the Bank of Thailand on Wednesday held its key policy interest rate unchanged at 1.75%, at the conclusion of a monetary policy committee meeting.

Thailand investment advisers expect the nation's central bank may again cut rates later in 2025, as it did earlier in the year.

But in June, the Bank of Thailand said it was holding firm.

"The Thai economy in the first half of 2025 expanded better than estimated from the manufacturing sector and accelerating exports of goods," said the Bank of Thailand, in a prepared statement.

Nevertheless the central bank added, "There is a risk that product exports will be affected by the US import tax policy. There is also an additional risk from geopolitics and domestic factors."

Inflation is also muted, said the Bank of Thailand. "General inflation tends to be low due to supply-side factors. while credit slowed down. This is partly due to decreased demand for credit in some groups and increased credit risk," noted the central bank.

Thailand's gross domestic product (GDP) will grow by 2.3% in 2025, and then by a lesser 1.7% in 2026, estimated the Bank of Thailand.

Thailand's official inflation rate in 2025 and next year will remain below the Bank of Thailand's 1% to 3% annual inflation target band target, said the central bank.

"General inflation in 2025 and 2026 is expected to remain low at 0.5% and 0.8%," said the central bank. "Core inflation (that strips out certain fresh food and energy bills) in 2025 and 2026 will be 1.0% and 0.9%, respectively."

The Bank of Thailand's interest rate reached a zenith in 2024, at 2.5%, as the central bank lifted rates to cool inflation.

The nation's central bankers thereafter cut rates three times, bringing it to 1.75% at the policy committee's May 2025 meeting.

The Bank of Thailand may return to rate-cutting in the second half of 2025, said financial industry observers.

Two rate cuts in the reminder of 2025, to bring the Bank of Thailand policy rate to 1.25%, are possible, said the SCB Economic Intelligence Center, the research arm of Siam Commercial Bank.

The "SCB EIC forecasts two rate cuts in the second half of the year, bringing the rate down to 1.25% to ease tight financial conditions for an economy growing below its potential," reported The Bangkok Post on Wednesday.