Thailand’s SCB expects two more policy rate hikes to 2%
Siam Commercial Bank (SCB)’s research arm predicts the Bank of Thailand will raise the policy rate twice by 0.25 points to 2% this year.
The SCB’s Economic Intelligence Centre (EIC) issued the forecast on Thursday, a day after the Monetary Policy Committee raised the rate by 0.25 points to 1.5%.
The EIC said it expected two more hikes, in March and May.
It also forecast Thai GDP growth of 3.4% this year driven by tourism, consumption and spending by the private sector. It cited the return of Chinese tourists after Beijing eased travel restrictions sooner than expected. The tourism revival would lead to increased consumption and spending, it added.
But the EIC warned that growth of the Thai export sector would be sluggish following contraction in three successive months up to December 2022 due to the global economic slowdown.
Thai exports would also come under pressure from new import taxes imposed by Europe and India, which are key trading partners, it added.
The headwinds would see Thai export growth of only 1.2% growth this year, the EIC said.
It predicts Thailand’s headline inflation will drop from 6.1% last year to 3.2% this year, still above the central bank’s 1-3% target. Inflation would exceed the target due to high energy and food prices.
It forecast core inflation would rise from 2.5% last year to 2.7% this year.
The EIC’s currency prediction has the baht rallying to between 31.5 and 32.5 against the US dollar by the end of this year. The Thai currency has risen 5.6% against the greenback since the start of the year.
