Kasikorn Research Center expects the MPC to not cut interest rates.

Bangkok,, Kasikorn Research Center expects the MPC to maintain interest rates on 12 June even though inflation in May rose to 1.54%, the highest in 13 months.

From the Ministry of Commerce reporting that inflation numbers for May 2024 expanded 1.54% (YoY), the highest in 13 months, Kasikorn Research Center analyzed that for the rest of 2024, inflation is expected to return to the Monetary Policy Committee’s target range ( MPC)?

Thailand’s general inflation in May increased for the second consecutive month as a result of electricity costs, domestic oil prices, and fresh fruit and vegetable prices. and chicken eggs that have increased It is expected that inflation in June will increase at a slower rate than in May as the low base effect of electricity prices will decrease. In addition, electricity prices are fixed in May-August. In addition, the prices of fruits and vegetables tend to decrease after the end of the hot weather and the rainy season.

Looking at general inflation during the rest of the year. Re
turning to the MPC’s target range of 1-3%, it still estimates average general inflation in 2024 at 0.8% based on low base factors during the 4th quarter of the previous year. In addition, the government sector has gradually floated the price of energy in the country. This results in pressure on the MPC. There will probably be fewer policy interest rate cuts.

Kasikorn Research Center views that the MPC is likely to hold the policy interest rate at 2.50% throughout this year. Although the most recent survey of economists sees a chance that the MPC may cut interest rates once this year, the Kasikorn Research Center thinks that the MPC will probably wait for the US Federal Reserve (Fed) to cut policy interest rates first. From the direction of the Thai economy that is likely to expand faster in the second half of this year. Meanwhile, Thailand’s general inflation is likely to return to the MPC’s target of 1-3% by the end of this year. In addition, there is pressure on the baht to depreciate from the Fed’s tenden
cy to maintain high interest rates for longer than expected.

Source: Thai News Agency