Goldmans and J.P. Morgan Still Expect May BoT Hikes Post Yesterday's CPI Data

Both banks still expect the BoT to hike in May despite yesterday's downside CPI surprise.

Goldman Sachs: "Thailand's headline CPI inflation declined to 2.8% yoy in March (vs. 3.8% yoy in February) mainly driven by lower transport and food prices. Core inflation, which excludes raw food and energy, also declined to 1.7% yoy in March (vs. 1.9% yoy in February).

We revise down our annual average headline inflation forecast to 2.5%/1.8% in 2023/24 (vs. 2.8%/1.9% previously) and our core inflation (ex raw food and energy) forecast to 1.7%/1.0% in 2023/24 (vs. 2.7%/2.1% previously). We continue to expect another 25bp hike from the Bank of Thailand (BOT) at its May meeting."

J.P Morgan: "Expect a further 25bp hike in May – Overall CPI inflation looks set to revert to the 1-3% target range in 2Q23. Equally importantly, core inflation is also likely to drop to 1.7% in 2023 (2022: 2.5%). Despite our more cautious outlook on growth and stronger disinflation views, however, the tone from the last BoT statement suggests that the central bank may be comfortable with further policy tightening for now. As such, last week we had penciled in a further 25bp hike in May, thus bringing the terminal policy rate to 2.0%."