Kasikorn forecasts Thai central bank to hold policy rate, while year-end rate hike possible 

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Kasikorn Research Centre said on Thursday it expects the Monetary Policy Committee (MPC) to retain its policy rate at a record low of 0.5 per cent at its upcoming meeting next week, with a chance of rate hikes at the end of the year.

To support the momentum of the recovery of the Thai economy, analysts predict that the Bank of Thailand will likely hold its policy rate unchanged in its next meeting on June 8. 

“The Thai economy is gradually recovering amid pressures from growing inflation and global recession,” the Kasikorn analysts said. “There is no urgent need for the MPC to raise the policy interest rate at this time.”

Since May 2020, the central bank has maintained its policy rate at a record low of 0.5 per cent in the face of unprecedented economic impacts from the Covid-19 pandemic.

Citing the lifting of entry rules for visitors and the country’s strong export sector, Kasikorn analysts stressed that the Thai economy is gradually recovering. However, the Russian invasion of Ukraine may result in fewer arrivals from Eastern European countries, they noted.

The research centre said that if the Federal Reserve raises the interest rate higher than expected, the MPC might consider lifting the interest rate from 25 to 50 basis points in the fourth quarter. 

Earlier, the central bank’s governor, Sethaput Suthiwartnarueput, also assured that Thailand has no need to raise its interest rate following the Federal Reserve, as domestic factors and the economic recovery will be the main issues determining the policy.

“The country’s external position remains strong with low foreign debt and high international reserves,” Sethaput remarked.

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