With Thailand’s inflation cooling to a 13-month low in February, analysts have begun watching the central bank for signs of when it might consider pausing its policy tightening.
(Bloomberg) — With Thailand’s inflation cooling to a 13-month low in February, analysts have begun watching the central bank for signs of when it might consider pausing its policy tightening.
Headline inflation eased to 3.79% last month from a year ago, the lowest since January 2022 and compares with a median estimate of 4.10%. The core measure, which excludes fuel and food prices, rose 1.93%, the softest reading in a year, while consumer prices fell 0.12% compared to the previous month.
“Inflation has softened but it’s still well above the 1%-3% inflation target, so a rate hike on March 29 is still on the cards,” said Nattaporn Triratanasirikul, an economist at Kasikorn Research Center. “We will closely monitor the upcoming policy signal whether they will end the rate tightening or they will go ahead.”
Although the Bank of Thailand has raised borrowing costs by just 100 basis points since August, price gains have eased significantly compared to neighbors. Philippines, where authorities have jacked up borrowing costs by 400 basis points, saw its core gauge quicken at the fastest pace in 24 years in February.
Decelerating inflation gives the BOT scope to pause, although “more hikes can’t be ruled out further down the road,” Bloomberg economist Tamara Mast Henderson wrote in a note.
Standard Chartered Bank Plc expects the BOT to deliver 25 basis-point hikes each at the March and May meetings to reach a terminal rate of 2%, Bangkok-based economist Tim Leelahaphan said in a report Tuesday. Elevated oil prices, rising wages and electricity prices could make inflation sticky, he said.
Thailand’s headline print will ease to a range of 2%-3% this year, supported by a strengthening currency and higher interest rates, said Wichanun Niwatjinda, deputy director-general of the Trade Policy and Strategy Office.
“March inflation is projected to ease further or remain at a similar level to February as fresh food and domestic retail oil prices are expected to continue to decrease,” Wichanun said. “Headline inflation could ease to 0% in October if oil prices continue to fall.”
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.