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Thailand Monetary Policy November 2023

Thailand: Central Bank stands pat in November

At its 29 November meeting, the Monetary Policy Committee of the Bank of Thailand (BoT) kept the policy rate unchanged at 2.50%. The decision was unanimous and matched market expectations.

Limited price pressures and an expected recovery in activity were behind the Bank’s decision. Meanwhile, the BoT sees inflation increasing in 2024 due to stronger domestic demand and supply-side pressures stemming from the El Niño weather phenomenon. That said, the Bank sees inflation remaining within the 1.0–3.0% target range. With regard to activity, the Bank cut its 2024 growth projection by 0.6 percentage points to 3.8%, as “structural impediments could limit the positive effects of global demand recovery on Thai exports”.

In its forward guidance, the Bank stated that its current monetary policy stance was “appropriate for supporting long-term sustainable growth” and that future decisions would depend on inflation and the broader economic outlook. Our panelists expect interest rates to decline somewhat next year as the Bank seeks to sustain growth amid moderate inflation.

The next meeting will take place on 7 February 2024.

Enrico Tanuwidjaja and Sathit Talaengsatya, economists at UOB, commented on the outlook:

“We maintain our view that the BoT has reached its neutral rate at 2.50% for its current rate-hiking cycle, and the policy rate should stay unchanged in 2024 due to its concerns on macro-financial stability and the need to maintain sufficient policy space.”

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