Citibank Thailand still expects the policy interest rate to be gradually adjusted to 2.25% by the third quarter of 2023, most recently following the Bank of Thailand (BOT) announced an increase in the policy rate to 1.50%, in line with the market and Citi. anticipated as a result of the overall picture of the Thai economy that has continued to recover and concerns regarding the global economy of the Bank of Thailand (BOT), as well as the outlook on the tourism sector that has improved following the opening of China. remain high Including the upside risk from inflationary pressure from the demand side that may increase as well
Ms. Nalin Chatchotham, economist, Citibank Thailand, said, “Citi still expects the BOT to The policy rate will be raised to 2.25% in the third quarter of 2023 as the Thai economic growth momentum remains positive during 2023-2024. Although the BOT still has concerns regarding household debt and SMEs, the BOT still views that private credit can continue to grow. despite rising interest rates and financial costs Citibank expects headline inflation to average 2.2% next year, so the real policy interest rate will gradually rise from negative to 0%, similar to the historical average. may cause the BOT The policy rate hike is less than expected: 1) The global economy may slow down more than previously expected. And may affect the Thai export sector and 2) If the baht appreciates too quickly, some MPCs may consider delaying the interest rate hike.”
Citibank views that The recent appreciation of the baht is unlikely to be the main concern of the MPC at this stage, although the recent appreciation of the baht raised concerns regarding possible impacts in some sectors, such as those exports. Exchange rates are not one of the main goals of monetary policy. which consists of sustainable growth of the economy price stability and stability in the financial system. Bank of Thailand revealed during a press conference on January 25, 2023 that the movement of the baht Still at a level that is in line with the fundamentals of the economy and does not require special measures to take care of
On January 25, 2023, the Monetary Policy Committee (MPC) unanimously resolved to raise the policy rate by 0.25% per year from 1.25% to 1.50% following assessing that the downward risk of global economic growth might reduce Both the latest economic data of developed countries came out better than expected. And the opening of China faster than expected, and the Bank of Thailand (BOT) has predicted that the global economy will pass the lowest point this year. Including the export sector will begin to recover in 2024, although Thai exports at the end of the year will grow lower than expected. In 2023, this will increase to 34 million from 31.5 million originally expected. which the BOT views that the recovery of the tourism sector will result in employment as well as an increase in the incomes of the services sector and the broader self-employed
Meanwhile, the Bank of Thailand’s view on domestic inflation has not changed much from the November meeting, noting that falling global commodity prices have eased supply-side inflationary pressures in Thailand. Ready to see that medium-term inflation expectations for private companies are still anchored at 1-3% of the monetary policy target. However, the BOT still views that core inflation remains at a higher level than in the past a lot which the BOT noted that The latest inflation indicators show that inflationary pressures remain high. And still need to be careful to pass the unfinished production costs to the prices of consumer goods in the future. Especially from electricity prices that have been adjusted earlier in 2023, as well as the increasing recovery of the tourism sector may be another factor that causes higher inflationary pressures from demand factors.
