- The votes were split again, with two out of seven MPC members voting for 25bps cut.
- The BOT sees the policy rate staying at neutral in April, but would adjust if the outlook changes.
- Following April’s review, we see a 25bps rate reduction to 2.25% in 2Q24…
- …to mitigate downside growth risks amid a highly uncertain environment.
- The BOT sees 2024 growth at 2.6%, vs the previous 2.5-3.0%, and lowers headline inflation to 0.6%.
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Third straight BOT policy rate hold in April
The Bank of Thailand (BOT) held its policy rate at 2.50% for the third consecutive decision on April 10, maintaining its patience over current soft economic conditions. Yet, the votes were split again. Most Monetary Policy Committee (MPC) members viewed the current policy rate as consistent to sustain economic growth and foster longer-term financial stability, except for two members. Two members favoured 25bps cut, given Thailand’s lower potential growth due to structural challenges, and to partly provide debt-servicing relief to borrowers.
Door for rate cut remains open
Following April’s review, we see a 25bps rate reduction to 2.25% in 2Q24 to mitigate downside growth risks amid a highly uncertain environment. The door for rate cuts remains open, with the BOT monitoring the export recovery, government budget disbursement, and fiscal stimulus measures. BOT Assistant Governor Piti Disyatat said in a briefing that the policy rate remains neutral, but the rate would be adjusted if the outlook changes.
The BOT lowered 2024 growth and inflation forecasts
The BOT’s April decision was finalised under its assumption of 2024’s growth uptick and headline inflation returning to its 1-3% target by year-end. Yet, its updated 2024 growth forecast of 2.6% is at the lower end of its previous 2.5-3.0% range shared in its February 2024 review. The BOT has pegged both 2024 headline and core inflation at 0.6% (vs its headline inflation projection of ~1% in its February 2024 review). Upside risk to our policy rate forecast could be from prioritising high household debt over soft economic growth.
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