FSS Sees Terminal Rate for Thai Central Bank at 2% before Easing in 2024

Finansia Syrus Securities (FSS) expects the Thai policy committee to raise the rate in today’s meeting, seeing terminal rate at 2% before easing in 2024.

FSS advised investors to keep an eye on the Monetary Policy Committee (MPC) meeting today. It is the last meeting of this year. The market expects the committee to hike its policy rate by another 0.25% to 1.25%, in line with the economic recovery. In this regard, the MPC anticipates 2022 economic growth at +3.3% Y-Y, close to its pre-covid level. In 2023, the growth rate should accelerate to +3.8% Y-Y, higher than its pre-covid level. Since the committee projects the 2022-2023 headline inflation at 2.4-2.6%, short-term interest rates should continue to climb next year. In particular, it should increase to 1.75-2% before they stabilize or ease in 2024. If the rate increase is in line, it should help create confidence in Thailand’s economic outlook. It should recover and be strong enough to cope with the interest rate uptrend. Also, a higher rate should be a boon for domestic plays, especially banks. FSS said that BBL and KTB remained its top picks.