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MNI Bank Of Thailand Preview - August 2023: Hiking Towards Expected Inflation Rate

THAILAND
  • The Bank of Thailand (BoT) is likely to hike rates 25bp to 2.25% given the inflation risks that BoT still sees as present, despite headline inflation being only 0.2% and core at 1.3% is within the target band. It is the outlook for inflation that matters to BoT and it sees the current very low rates as temporary. . A speech by Governor Sethaput in July made clear that gradual policy normalisation will continue given the outlook.
  • Given the focus is on the outlook rather than actual data outcomes, which he says have a lot of noise in them currently, then any changes to BoT’s forecast are likely to be the focus and important to the monetary policy outlook beyond August.
  • If the inflation forecast for 2023 remains unchanged at 2.5%, then rates could rise again on September 27 to bring them in line with expected inflation and make real rates slightly positive in 2024.
  • See full preview here.

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