VIEW: UOB Still Look For July Lift Off

Late on Monday UOB noted that “as the inflation rate remained within the central bank’s target range, BI still has the policy space to remain accommodative to support the economic recovery, especially as core inflation is still below 3%. However, we are of the view that the room to keep rates steady is getting more limited amidst global supply chain disruption causing upward price pressures, higher global energy prices, and stronger domestic demand-pull inflation. We continue to hold our forecast that BI will hold its benchmark rate unchanged in H122 and to start hiking in Jul 2022. Our current forecast is for two 25bps hikes in Q322 to 4.0%, followed by another two 25bps hikes in Q4 2022 to 4.5%. Our terminal BI rate forecast is currently set at 5.0%, which is likely to be seen in Q123.”