Bank of Thailand likely to delay rate cuts amid economic growth

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KResearch, which had initially predicted a GDP growth rate between 0.6-0.8%, now suggests that the central bank will maintain its policy rate at 2.5% until the end of the year.

Recent economic data indicating stronger-than-expected GDP growth in Thailand for the first quarter has led several research houses to adjust their forecasts regarding the timing of the Bank of Thailand (BOT)’s policy rate cuts. The National Economic and Social Development Council (NESDC) reported a 1.5% year-on-year increase in GDP, exceeding the projections set by both Kasikorn Research Center (KResearch) and CIMB Thai Bank (CIMBT).



KResearch, which had initially predicted a GDP growth rate between 0.6-0.8%, now suggests that the central bank will maintain its policy rate at 2.5% until the end of the year. The outlook is a shift from their earlier prediction of rate cuts beginning in the second half of the year. Additionally, KResearch has adjusted its 2024 GDP growth forecast down to 2.6% from 2.8%, aligning with NESDC’s revised projections.

CIMBT, which had estimated first-quarter GDP growth at 0.8%, also anticipates that the central bank will postpone the policy rate cut to December and expects only a single 25-basis-point reduction in 2024, contrasting with their previous expectation of two cuts. This revised outlook is partly due to local banks’ decision to reduce the minimum retail interest rate (MRR), which has eased the debt repayment burden for customers, contributing to the delay in policy rate adjustments.




In light of these developments, CIMBT is considering an upward revision of its own 2024 GDP growth forecast from the current 2.3%, depending on forthcoming economic developments and the impact of public spending from the fiscal budget disbursement.

The NESDC has now set the GDP growth projection for 2024 between 2% and 3%, a slight decrease from its earlier forecast of 2.2% to 3.2%, reflecting concerns over escalating trade protectionism, geopolitical conflicts, and global economic volatility. (NNT)