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Bank of America (BofA) analysts provided insights into Thailand’s economic outlook, focusing on the trajectory of inflation and the implications for the country’s monetary policy. Inflation in Thailand averaged 1.08% for the first quarter of this year.
BofA analysts expect this trend to continue, with inflationary pressures remaining subdued over the coming months. They project a sharp decline in headline inflation as the base effect fades, forecasting an average inflation rate of around 0.7% for 2025.
The current policy rate in Thailand stands at 2.0%. According to BofA, this rate is considered too tight in light of the weak inflation outlook. Consequently, they anticipate further monetary easing.
BofA maintains the stance that three additional rate cuts are likely within the next 12 months, predicting a terminal rate of 1.25%. They also note that risks are tilted to the downside, acknowledging potential growth headwinds.
The analysts expect the first of these rate cuts to occur at the April Monetary Policy Committee (MPC) meeting, with a reduction of 25 basis points. This move is anticipated as part of the effort to align the policy stance with the current economic indicators, which suggest a need for a more accommodative monetary policy to support growth.
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