Display mode (Doesn't show in master page preview)

24 May 2023

Econ Digest

MPC is expected to raise its policy rate by 0.25% at its meeting scheduled for May 31, 2023


        The Monetary Policy Committee (MPC) is expected to raise its policy rate by 0.25% to 2.00% at its upcoming meeting on May 31, 2023. This is potentially the last rate hike in this economic cycle. However, the committee signaled in its previous meeting that rate rises may continue amid elevated inflation risks due to the ongoing recovery in domestic demand, along with uncertainties over cost pass-through from producers to consumers, and future trends in energy prices and commodity goods. These factors contribute to the likelihood of the MPC raising the rate at its meeting on May 31, 2023, as earlier signaled. Nevertheless, a significant decline in inflation, increased economic risks from domestic political uncertainties and the global economic slowdown, and the easing of monetary policy by several central banks worldwide following the US Federal Reserve (Fed)’s signal to pause rate hikes soon, may lead the MPC to give more weight to economic risks and perhaps stop raising its policy rate in the near term.

        Looking ahead, KResearch holds the view that the MPC will likely maintain the interest rate at 2.00% for the rest of 2023 if the Thai economy continues its sustained recovery in the second half of the year, as anticipated. However, the Baht remains susceptible to volatility. The Thai currency is expected to receive support from a projected current account surplus amid the recovery of the tourism sector. However, uncertainties surrounding the formation of a new government could exert downward pressure on the currency. Meanwhile, the US Dollar may receive support if the Fed continues with its policy rate hikes, contrary to market expectations, due to persistently high inflation and a strong labor market. Additionally, the demand for safe-haven assets, such as the US Dollar amid increasing global economic risks, may also contribute to the currency’s strengthening.

Scan QR Code

QR Code


This research paper is published for general public. It is made up of various sources. Trustworthy, but the company can not authenticate. reliability The information may be changed at any time without prior notice. Data users need to be careful about the use of information. The Company will not be liable to any user or person for any damages arising from such use. The information in this report does not constitute an offer. Or advice on business decisions Anyhow.

Econ Digest