VIEW: Goldmans Expects BoT To Keep Rates At 2%

The Bank of Thailand (BoT) increased rate 25bp to 2%, as was widely expected. It reiterated that a “continuation of gradual policy normalization to be appropriate in light of the growth and inflation outlook". Goldman Sachs believes that the BoT is done tightening.

• “The statement continues to characterize risks as being skewed towards more persistent high inflation outcomes especially due to demand-pull inflation and higher cost pass-through to retail prices by businesses. It also noted potential risks to inflation from changes in future government economic policy.”
• “BoT continues to expect the tourism recovery to be a key impetus to growth this year. The committee listed changing government policies as an upside risk to growth, while the uncertain global economic and monetary policy outlook are listed as downside risks to growth.”
• “Going forward, we expect BOT to keep the policy rate unchanged at 2.0% for the remainder of the year as inflationary pressures ease. However, we see a risk of additional rate hikes should inflation fall slower than we expect and/or growth come in significantly stronger than we forecast in coming months.”