Friday, June 10, 2022, 04.11 a.m.
TISCO expects the MPC to gradually raise interest rates three times in 65, reaching 1.25% at the end of the year.
TISCO Center for Economic Analysis and Strategy expects the Monetary Policy Committee to gradually raise interest rates for the rest of the year. Supporting the policy interest rate at 1.25% at the end of 2022, avoiding strong drugs to reduce economic disruption
Mr. Thammarat Kittisiripat Head of Economic Research TISCO Center for Economic Analysis and Strategy revealed that the Monetary Policy Committee (MPC) decided to keep the policy rate unchanged at 0.50%, as the market expected. Policy interest rate of 0.25% (25bps) in this meeting. This signals that the policy rate will be raised soon. In contrast to the previous meeting of the Board of Directors unanimously resolved to maintain the policy rate. The minutes of the meeting stated that “Currently accommodative monetary policy will be less necessary going forward.”
In addition to the dissent vote, the MPC has significantly raised its inflation forecast. The MPC expects inflation in 2023 to move closer to the upper limit of the 3% target inflation rate. It said at the meeting that more accommodative monetary policy was necessary to reduce. TISCO Center for Economic Analysis and Strategy believes that the MPC will raise the policy rate at its next meeting in August from previously expected rate hikes next year.
for the gradual normalization of monetary policy TISCO Center for Economic Analysis and Investment Strategy expects the policy rate to be raised by 0.25% at all meetings for the remainder of 2022, which are August, September and November, and will bring the policy rate back to its normal level. Pre-epidemic levels of 1.25% at the end of the year from 0.50% currently.
However, the chances of raising interest rates as many as three times this year may be reduced. This depends mainly on economic development and inflation. and/or the government increases diesel price subsidies, such as lowering the diesel price ceiling to below 35 baht per liter, which will help reduce transmission costs and reduce inflationary pressures, etc.
“The MPC may want to reduce the risk. avoid using strong drugs If you choose to raise interest rates next year As has seen many countries raise interest rates as high as 0.50% per meeting. Since the risk of inflation still tends to a high side and takes time to pass into the economic system, the MPC has opted to signal faster and gradually raise interest rates instead. in order for the market to gradually adjust and then periodically assess the picture of the economy and inflation,” Mr. Thammarat said.
However, many situations are still very challenging and uncertain. Including if the interest rate hike has already started and caused a halt to the economic recovery. Or the world economy has a serious slowdown. For example, in Europe, where the economy may be heavily affected by the refrain from energy imports from Russia this year, the MPC may choose to hit the brakes. Stop raising interest rates continually as well.