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Thailand Monetary Policy April 2024

Thailand: Central Bank stands pat in April after split vote

At its 10 April meeting, the Monetary Policy Committee of the Bank of Thailand (BoT) kept the policy rate unchanged at 2.50%. The decision was not unanimous: five members voted to stand pat, but two voted for a 25 basis point cut.

Inflation is currently subdued, primarily due to supply factors and government subsidies, but it is expected to gradually increase. The Bank sees headline inflation moving towards the 1.0-3.0% target by the end of this year and projects it at 0.6% in 2024 and 1.3% in 2025, while core inflation is forecast at 0.6% in 2024 and 0.9% in 2025. With regard to activity, the BoT projects GDP to expand between 2.6% and 3.0% this year, but it warned that “structural impediments, particularly deteriorating competitiveness in the exports and manufacturing sectors […] limit the benefits of the global economic recovery on the Thai economy”.

In its forward guidance, the Bank reiterated that its current monetary policy stance “remains consistent with sustaining growth while fostering macro-financial stability in the longer term”. It noted lingering economic uncertainty and stated that future decisions would depend on the outlook for growth and inflation. Our panelists expect interest rates to decline somewhat this year as the Bank seeks to sustain the economy amid moderate inflation.

The next meeting will take place on 12 June.

Commenting on the outlook, UOB’s Enrico Tanuwidjaja and Sathit Talaengsatya stated:

“Based on the latest policy decision, we are now confident that the BOT will cut the policy rate twice this year, at its Jun and Aug Meetings, 25 basis points each, based on our view that inflationary pressures will remain muted, and we expect more subdued growth.”

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