As expected, the Bank of Thailand (BoT) kept its benchmark policy rate unchanged at 1.5%, where it has stayed since April 2015. We believe any change in the monetary policy will depend on the potential outcome of the 2Q GDP as well as inflation.

In the interim period, we foresee the baht, which is the fourth worst performing currency in Asia ex-Japan, remaining under pressure. We expect the USD to stay strong.

For now, we are of the view that there is no urgency for the BoT to raise rates due to subdued price pressure. We believe the central bank will likely raise rates in 2019.

• In line with the market’s and our expectations, the Bank of Thailand (BoT) kept its benchmark policy rate unchanged at 1.5%, where it has stayed since April 2015. Despite the overall tone remaining neutral, we noticed one MPC member voted for rate hike.

• We are of the view that there's is no urgency for the BoT to raise rates due to subdued price pressure with demand-pull inflation gaining only moderately. Inflation currently flirts at the lower end of the BoT's 1%–4% target. We believe any rate hike will likely take place in 2019.

• Meanwhile, the baht, which is the fourth worst performing currency in Asia ex-Japan, will remain volatile due to ongoing noises. Thus, the USD is poised to stay strong. We project the baht to weaken to 33.80 in 2018 from 32.57 in 2017.

Source: AmInvest Research - 9 Aug 2018