BoT May Pause Or Hike In September

Bank of Thailand governor Sethaput spoke today and his tone was similar to his comments in July which were followed by a 25bp rate hike. However today he didn’t reiterate that there was no need to end policy normalisation. Decisions will continue to focus on the outlook rather than individual data points but there is now a chance of a pause or another hike at the September 27 meeting. But now is not the time to start easing. Many economists expect that tightening is done this cycle given low inflation and growth uncertainties.

• BoT may revise down its 3.6% 2023 growth forecast but it will remain above 3% with private consumption and tourism as the key drivers. Tourist arrivals are still expected to be 29mn in 2023. The focus is on a smooth landing for the economy.
• Governor Sethaput doesn’t see a reason to increase rates beyond neutral. In the May minutes, rates were not yet at neutral. He said that rates should not create financial imbalances and that the current level has not created a surge in bad loans.