Sell-Side BoT Views Post Yesterday's 25bps Hike

Sell-side analysts highlight risks of further tightening post yesterday's +25bps hike.
ANZ note: "Overall, there were no clear signs from the BoT that suggest that its rate hiking cycle is over. Today’s decision to hike was unanimous, while the monetary policy statement highlighted that financial conditions remain accommodative and flagged upside risks to demand price pressures. We maintain that there is still room for policy normalisation as long as Thailand’s growth outlook remains favourable. Historically, real policy rates tend to be slightly positive, and based on a one-year ahead core inflation forecast of around 2%, this suggests a terminal policy rate of 2or 2.25%.As things stand, we believe that the odds are slightly tilted towards a more conservative 2%, given the heightened uncertainty over global financial stability.

JPM note: "Add 25bp hike in May; higher bar for additional tightening – Despite our more cautious outlook on growth and stronger disinflation views, the language from today’s MPC statement (e.g., “continuation of gradual policy normalization to be appropriate”, “some upside risks to inflation stemming from demand pressures”) suggests that the BoT may be comfortable with further policy tightening for now. As such, we pencil in one more 25bp rate hike in May, bringing the terminal policy rate estimate to 2.0%. However, the bar for additional tightening is arguably higher against the backdrop of rising global credit stresses and recession risks."

Goldman Sachs note: "The Bank of Thailand (BoT) MPC committee voted unanimously to hike the policy rate by 25bp to 1.75% at its meeting today, reiterating that it views a "continuation of gradual policy normalization to be appropriate in light of the growth and inflation outlook". Ahead of the announcement, 18 out of 22 Bloomberg consensus panelists (including us) had expected the move, with the rest expecting no hike. With GDP growth momentum likely to remain robust as tourism picks up and supply-side constraints ease, and upside risks to core inflation as demand rebounds, we expect the BOT will hike policy rates another 25bp in May bringing the policy rate to 2.0%."