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18 Dec 2024

Econ Digest

The MPC voted unanimously to maintain its policy rate at 2.25%, as widely expected; it may cut the rate twice next year

คะแนนเฉลี่ย

The MPC voted unanimously to maintain its policy rate at 2.25%, as widely expected; it may cut the rate twice next year

At its meeting on December 18, 2024, the Monetary Policy Committee (MPC) voted unanimously to keep the policy rate steady at 2.25 percent, as widely expected. The Committee considered the current rate appropriate for supporting the Thai economy to expand almost on par with its growth potential, ensuring that the inflation rate leans towards the target range, while maintaining long-term financial stability, and the effectiveness of monetary policy to cope with rising uncertainties going forward.

The MPC’s post-meeting statement reflects concerns over future economic risks. Although the MPC has maintained its Thai economic growth projections for 2024 and 2025 steady at 2.7% and 2.9%, respectively, it sees that the Thai economy is likely to face more challenges and increased uncertainties going forward. Given this, the MPC may continue to monitor financial and economic developments, as well as the impact of the government’s “You Fight, We Help” initiative designed to help ease debt burdens of vulnerable groups, when determining appropriate monetary policy in the future.

KResearch views that the MPC may reduce the policy rate twice in 2025 amid heightened economic risk, particularly from US trade policies. Meanwhile, inflation in 2025 is expected to stay below the BOT’s target range of 1-3%. The timing of any interest rate cuts will primarily depend on incoming economic data, inflation, and domestic financial conditions.

After the release of the MPC meeting results, the Baht and the Thai stock market became more volatile.The Baht fluctuated within a range of THB34.25/USD to THB34.27/USD while the SET Index ranged within 1,394-1,398 points (as of 15:00 on December 18, 2024, Thailand time). The market also awaited the FOMC meeting results to be released on the night of December 18, Thailand time.

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Econ Digest

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