Thailand: Little impetus for BOT rate cut
BOT to keep rates unchanged for the rest of 2024.
Group Research - Econs, Chua Han Teng13 Jun 2024
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The Bank of Thailand (BOT) maintained its policy interest rate at 2.50% for the fourth straight meeting on June 12. We retain our expectation for a steady policy rate in 2024. The majority of the Monetary Policy Committee (MPC) assessed the current policy rate as consistent with growth converging to potential, improving inflation, and ensuring long-term financial stability. The degree of split votes for a 25bps cut dropped to one member from two in the previous two reviews, suggesting reduced impetus for lower rates.

Alongside an unchanged policy rate, the BOT also left its economic growth and headline inflation forecasts for 2024 and 2025 the same as April’s decision. The BOT expects growth to rise to 2.6% in 2024, broadly in line with our 2.8% projection, with 1Q24’s 1.5% YoY better-than-expected expansion marking 2024’s low point. 2024’s growth will be mainly driven by tourism and private consumption, accelerating government spending from 2Q24 onwards, and gradual exports recovery. Headline inflation has reverted to positive zone since April 2024. The BOT expects more durable readings within its 1-3% target range from 4Q24, with full-year 2024 averaging at 0.6%, from -0.1% YoY in the first five months of the year. Amid continued concerns over elevated household debt, a better cyclical outlook allows the BOT to better balance between its priorities. Nonetheless, given high uncertainties facing the Thai economy from the export recovery and government stimulus measures, the BOT has retained its rhetoric on policy flexibility.

Chua Han Teng, CFA

Economist - Asean
[email protected]

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