Abstract
The Monetary Policy Committee (MPC) voted 6 to 1 to maintain the policy rate at 2.5%, with one member voting to cut by 0.25 percentage point. The majority believes the current rate supports economic convergence and stability, while one member sees a lower rate as beneficial for borrowers. Economic growth projections for Thailand remain at 2.6% and 3.0% in 2024 and 2025. Despite challenges in exports and manufacturing, industrial production is expected to improve. Inflation is projected to be 0.6% and 1.3% in 2024 and 2025.
Summary
The MPC Decision
The Monetary Policy Committee (MPC) recently voted 6 to 1 to maintain Thailand’s policy rate at 2.5%. The lone dissenter voted in favor of a 0.25 percentage point rate cut. This decision reflects a more hawkish stance compared to the previous meeting, with the majority of MPC members seeing the current policy rate as appropriate for the economy to reach its potential while ensuring macro-financial stability.
Economic Outlook
The MPC projects economic growth of 2.6% and 3.0% in 2024 and 2025, respectively, driven by domestic demand, tourism recovery, and increased government spending. The committee expects a slow recovery in exports and the manufacturing sector due to structural challenges, but notes that industrial production growth has stabilized. Inflation is forecasted to be 0.6% and 1.3% in 2024 and 2025, with a gradual return to the target range by the end of 2024.
Policy Rate and Inflation Projections
Despite the dissenting vote, the MPC maintains its policy rate and inflation projections, citing rising energy and food prices as key drivers. The committee expects inflation to align with targets in the medium term, supporting a stable economic outlook. More details on the MPC decision can be found here.
Source : SCB EIC expects MPC to start the policy rate cut in Q4
