Thailand: BoT struck a cautious tone in December – UOB

Economist at UOB Group Barnabas Gan reviews the latest event by the Bank of Thailand (BoT).

Key Takeaways

“The Bank of Thailand (BOT) kept its one-day repurchase rate unchanged at 0.50% for its 13th consecutive meeting on 22 December 2021. The last time it made a move was in May 2020, when the benchmark rate was cut by 25 bps. The decision to leave the benchmark rate unchanged was unanimous across the committee members, unlike the meeting on 4 August where 2 out of 6 committee members voted for a rate cut.”

“Policy-makers upgraded their 2021 GDP growth outlook to 0.9%, up from 0.7% in their September monetary policy report. For subsequent years, the committee forecasts that GDP growth will average 3.4% and 4.7% in 2022 and 2023, respectively.”

“The latest policy statement was comparatively more cautious given the introduction of the Omicron COVID-19 variant.”

“On inflation, the central bank views that headline inflation will stay within target in the medium term, with headline CPI projections at 1.2%, 1.7% and 1.4% in 2021, 2022 and 2023, respectively.”

“More  importantly,  barring  an  uncontrolled  surge  in  COVID Thailand,  we  think  that  BOT  will  likely 19  infection  in take  a  step  towards  normalisation  by inject ing a  rate  hike  of  25  basis  points  in  4Q22.”