FILE PHOTO: The Bank of Thailand logo is pictured in Bangkok, Thailand, January 30, 2025. REUTERS/Chalinee Thirasupa/File Photo

By Rahul Trivedi

BENGALURU (Reuters) -The Bank of Thailand will lower its key interest rate on Wednesday to support a slowing economy as negative inflation persists and U.S. tariffs remain elevated, according to a Reuters poll of economists.

Thailand's central bank left its policy rate unchanged in June but noted it was open to cutting as needed to counter the effects of an economic outlook that has turned highly uncertain in recent months.

Central bank data showed private consumption contracted 0.3% and exports fell nearly 5.0% in June compared with May. This, along with negative inflation for the fourth consecutive month in July, will give policymakers room to cut on August 13.

More than 80% of economists, 23 of 28 in the August 4-8 Reuters poll, predicted the BOT would cut its benchmark one-day repurchase rate by 25 basis points to 1.50% on Wednesday. The rest expected no change.

"The economy is undeniably softening," Erica Tay, director of macro research at Maybank, said.

"The case for an August rate cut has grown stronger. The latest inflation data showed core inflation has reversed its rising trend. Weakening core inflation upends the belief recent price weakness is mostly due to global oil prices and weather-related food supply shifts," she added.

Among those who gave a longer-term outlook, 19 of 26 expected rates at 1.25% by the end of 2025, seven said 1.50% and one forecast 1.00%.

Vitai Ratanakorn will take the helm at the BOT on October 1 and he has said rates can go down much further.

With the U.S. placing tariffs on Thai goods of 19%, albeit less than the initially proposed 36%, economists expect a hit to growth.

A separate Reuters poll taken in July forecast growth at 1.3% and 0.9% in the third and fourth quarters, respectively.

"If you look at export growth, it's been in double digits until recently, mainly due to a rush by the U.S. to import goods from Thailand and other trading partners," Poon Panichpibool, a markets strategist at Krung Thai Bank, said.

"This will come down, and we'll see much slower growth, which is going to reduce overall economic growth in the second half."

(Other stories from the August Reuters global economic poll)

(Reporting by Rahul Trivedi; Polling by Susobhan Sarkar & Pranoy Krishna in BENGALURU and Sriring Orathai in BANGKOK; Editing by Andrew Heavens)