No More Rate Hike from Bank of Thailand through 2024 with Strong Growth and Low Inflation

The Bank of Thailand is expected to maintain its interest rates at 2.25% in the meeting on Wednesday and likely through 2024, according to the poll made by Reuters.

A year-long tightening cycle by the central bank could come to an end as 21 economists out of 27 expected the Monetary Policy Committee to leave rates unchanged at the meeting this Wednesday despite inflation rising slightly from 0.38% YoY in July to 0.88%YoY in August, it remained well below 1-3% target range of the central bank for the fourth month in a row, which indicated little need for another hike.

Meanwhile, the remaining six economists from the poll expected the Thai central bank to make the final hike in September for another 25 basis points and maintained the rates at 2.5% for the rest of this year.

The Bank of Thailand’s Governor Sethaput Suthiwartnarueput recently said that both economic growth and inflation were expected to be lower this year than previously anticipated due to softer tourism spending and a weak economic outlook for China, which is the kingdom’s major trading partner as well as a source of tourist arrivals prior to the pandemic.

In a long-term outlook, 47% of economists expected the Thai central bank to keep rates at 2.25% until the end of 2024, while six economists saw a final hike to 2.50% and four predicted a cut to 1.75-2%.

The Bank of Thailand is in a relatively comfortable position, according to Lavanya Venkateswaran, senior ASEAN economist at OCBC, as reported by Reuters. The bank could take its time on the rate decisions due to its strong growth, while inflation remains low.