Economists are anticipating that the Bank of Thailand (BOT) will raise its policy rate to 2% this month, following the U.S. Federal Reserve’s recent peak in its funds rate.
TMBThanachart Bank’s research center predicts that the Monetary Policy Committee (MPC) will raise the policy benchmark rate by 0.25 percentage points at the meeting on May 31. After this, the central bank is expected to maintain the rate for the rest of the year to focus on financial stability amid global uncertainties and high inflation rates.
Core inflation is forecasted to reach 101.5%, with headline inflation at 2.3%. The U.S. Federal Reserve’s recent quarter-point rate increase is expected to impact the movement of the Thai baht against the U.S. dollar.
The Kasikorn Research Center also predicts a 0.25 percentage point increase in Thailand’s benchmark rate this month, after which the central bank will monitor the global economy. It will also watch for increased risks for the U.S. financial industry before deciding on further policy rate movements.
Standard Chartered Bank meanwhile forecasts a 0.25 percentage point hike, which it considers the terminal point for this interest rate cycle. Despite global uncertainties, Thailand’s strong economic indicators and the BOT’s positive outlook for the economy are expected to support the continued normalization of the policy rate in an effort to build policy space. (NNT)