MPC will maintain interest rates at 2.50%, economists predict
Bank of Thailand’s Monetary Policy Committee unlikely to make a rate cut at this week’s meeting, analysts say
Economists are forecasting that the Monetary Policy Committee (MPC) will likely maintain the policy interest rate at 2.50% at its meeting on Wednesday (August 21), preferring to keep the option open to lower rates if the economic situation worsens. The committee will also monitor political developments and the formation of the new government before considering any rate cuts later in the year.
The upcoming MPC meeting is considered a key event as several economic factors might require the committee to take a proactive role in supporting Thailand's economy. This is especially true given the current political situation, which may delay government spending and investments. Despite the current economic uncertainties and the need for clearer political and economic indicators, many economists believe it may not be the right time to cut interest rates.
Piyasak Manason, senior economist at Innovest X Securities, believes that the MPC will likely hold the policy rate at 2.50%. Although overall economic performance is slowing, inflation is rising and is expected to reach the 1% target by the end of the year. The final decision will depend in part on the release today of the economic figures from the National Economic and Social Development Council (NESDC), which are anticipated to be around 2.1%, below market expectations of 2.4-2.5% from the previous quarter.
Burin Adulwattana, managing director and chief economist of Kasikorn Research Centre, also believes that the MPC will maintain the current interest rate, as they await further clarity on economic conditions. Although the Thai economy is showing signs of vulnerability, uncertainties remain in both the economic and political spheres.
Tim Leelahaphan, assistant general manager and economist for Thailand and Vietnam at Standard Chartered Bank, is another who expects the MPC to maintain the rate and potentially reduce it to 2.25% by December. This outlook aligns with previous forecasts despite global central banks, including those in the UK, New Zealand, the Philippines, and the US, starting to lower their rates. The MPC is likely to wait for clarity from the US Federal Reserve and other regional central banks before making any rate adjustments, he points out.
