As most major economies signal a turn to more dovish monetary policy and inflationary pressure continues to subside, private researchers now expect the Thai central bank to end rate-hike cycles this month with a terminal rate of 1.75% this year.
The Bank of Thailand researchers now expect the Thai central bank to end rate-hike cycles this month with a terminal rate at 1.75% in 2023 and is anticipated to lift its benchmark one-day repo rate by 25 basis points to 1.75% at its meeting on Wednesday (March 29), nearly double where it was before the Covid-19 pandemic.
Since August, the BOT has hiked rates four times by 25 basis points, for a total rise of 100 basis points.
Thailand’s inflation rate fell to a 13-month low of 3.79% in February, down from 5.02% in January, giving the central bank a chance to bring inflation back down to the target range of not over 3%.
Meanwhile, the world’s top central banks are openly considering pausing rate hikes, with the US Federal Reserve hinting it was on the verge of pausing, while the European Central Bank (ECB) saying it would no longer provide guidance and instead decide meeting by meeting, and the Bank of England (BOE) stating it expected inflation to fall faster than previously predicted.
According to a Reuters poll, Thailand’s economy is expected to expand 3.7% this year and 3.8% next year, mostly in line with the central bank’s estimates, and inflation should average 2.8% this year before falling to 1.9% in 2024.
