BANGKOK, Thailand – Krungthai COMPASS anticipates that the Bank of Thailand’s Monetary Policy Committee (MPC) might lower the policy interest rate in the next round. This comes after the MPC voted 6 to 1 to maintain the current policy rate at 2.50% per year on August 21, marking the fifth consecutive time that the rate has remained unchanged. The committee made this decision based on the assessment that Thailand’s economy is poised for growth, primarily driven by the tourism sector and domestic demand. Additionally, general inflation is expected to decline more than initially projected, with medium-term inflation forecasts remaining within the target range.
Krungthai COMPASS suggests that there remains a possibility for a rate cut in the near future. This is due to the potential downside risks to the Thai economy in the second half of 2024 (2H67), including weakened private consumption linked to declining consumer confidence and a slowdown in private sector investment, as evidenced by negative capital goods imports. Additionally, competition from Chinese products is affecting domestic production. The unexpected drop in general inflation, beyond the MPC’s estimates, may create further room for the central bank to adjust the policy rate downward in the future. (TNA)
