Others also expect the central bank will be forced to act.
"The central bank will eventually be compelled to use up what little ammunition it has left in the coming months, and cut its policy rate by another two times (of 25bps each) before the first half of the year is up," HSBC said in a note. "There is no real end game in sight, given the February 2 elections may not appease the opposition and protesting groups."
In response to a spate of protest-related violence over the weekend which killed at least one and wounded dozens, some seriously, the government declared a 60-day state of emergency in Bangkok and surrounding provinces late Tuesday, allowing security agencies powers including enforcing curfews, detaining suspects without charges and preventing large political gatherings.
(Read more: We don't mind if we lose 'fair elections': Abhisit)
While so far the government has avoided strictly enforcing these measures, how the powers are used is being closely watched as a potential flashpoint for intensifying protests.
The street protests are calling for Prime Minister Yingluck Shinawatra to step down and to replace their country's democracy with an unelected "people's council" for an undefined period of time.
In early December, Yingluck called a snap election in an unsuccessful effort to defuse protests. Since then, the main opposition, the Democrat party, has said it will boycott the election and protesters have prevented candidates from registering. The Election Commission is seeking the approval of the Constitutional Court to delay the elections.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1