MPC Meeting, June 12, 2024: MPC expected to keep policy rate steady in a split vote and signal no change from its previous meeting (Business Brief No.4063)

• At the upcoming Monetary Policy Committee (MPC) meeting slated for June 12, 2024, the MPC is expected to remain divided in its decision to maintain the policy rate at 2.50 percent. The committee is likely to reiterate its stance from the previous meeting that the current policy rate is appropriate and necessary to preserve monetary policy space to withstand future uncertainties. Additionally, the monetary policy is less effective in addressing structural problems that have constrained Thailand's economic growth potential. The MPC is also likely to prioritize financial system stability and the high volatility of the Baht, in light of market expectations that the US Federal Reserve (Fed) will maintain its policy rate at high levels for longer than anticipated.
• KResearch holds the view that the MPC is likely to keep the policy rate steady at 2.50 percent throughout 2024, even though most economists predict the MPC could cut the rate once this year. We anticipate that the MPC may wait for the Fed to the make the first move. Thailand’s economic growth is expected to accelerate in 2H24, while headline inflation in the country is set to return to the BOT’s target range of 1-3 percent by the end of this year. Additionally, the Baht remains on a weakening trend amid the expectation that US interest rates will stay high for longer.