Sell-Side Sees BoT On Hold For Rest Of 2023

After yesterday's +25bps hike, which was close to a 50/50 call in terms of the sell-side consensus, both Goldman Sachs and J.P. Morgan see the BoT remaining on hold for the rest of the year.

Goldman Sachs: "On forward guidance, a notable new insertion in the statement was that central bank now "deems the current policy interest rate to be appropriate for supporting long-term sustainable growth" after having hiked policy rates gradually to the current level. This point was reiterated at the post meeting press conference, which suggests that the BOT may be done hiking policy rates for now, and is likely to be in wait and watch mode going forward, while staying attuned to "upside risks from government economic policies".
Going forward, given the shift in policymakers rhetoric and relatively well-behaved inflation dynamics, we expect BOT to keep the policy rate unchanged at 2.50% for the remainder of the year."

J.P. Morgan: " BoT to stand pat to observe lagged impact of previous tightening – Even based on the assumption that core inflation will average 2.0% (JPM: 1.3%) in 2024, our Taylor Rule estimates imply a neutral policy rate of 2.25%. This means that at the current policy rate of 2.5%, the central bank is adopting a slightly restrictive policy stance. Following today’s hike, we are inclined to think that the BoT will stand pat as they have already incorporated the projected impact of the new government’s economic policies, which have been the key reason behind their “outlook dependent” policy making since 2Q23. There is also some minor shift in language (e.g., from “deliberating further policy rate increases” to “deliberating monetary policy” that could suggest a rate hold going forward."