SCB EIC expects MPC to start the policy rate cut in Q4
SCB EIC therefore expects the MPC to cut the policy rate once in late 2024 to 2.25% and cut again in early 2025 to 2%.
The MPC voted 6 to 1 to maintain the policy rate at 2.5%. One MPC member voted to cut the policy rate by 0.25 percentage point.
The communication at the latest meeting thus displays a more hawkish stance compared to the previous meeting in April which resulted in a 5-to-2 vote. The majority of MPC members deems the current policy rate to be consistent with the economy converging to its potential, as well as conducive to safeguarding macro-financial stability. Meanwhile, one member deems the lower policy rate to reflect Thailand’s lower potential growth as a result of structural challenges and partly alleviates debt burden for borrowers. As for the Thai economic outlook, the MPC retains its previous economic growth projections at 2.6% and 3.0% in 2024 and 2025, respectively driven by domestic demand, tourism recovery, and acceleration in government disbursement. Meanwhile, MPC expects exports and the manufacturing sector to recover slowly due to structural headwinds. However, MPC assesses that growth of the industrial production has bottomed out. As for the inflation outlook, the MPC also maintains its previous projections, forecasting headline inflation to be 0.6% and 1.3% in 2024 and 2025, respectively. The forecast reflects an upward trend in energy and fresh food prices. The MPC anticipates headline inflation to gradually return to the target range in the fourth quarter of 2024, while medium-term inflation expectations remain consistent with the target.