BoT: Rate on hold as Oil shock unfolds – UOB

UOB economists Enrico Tanuwidjaja and Sathit Talaengsatya expect Bank of Thailand to keep the BoT 1-D Repo Rate at 1.00% through at least 1Q27, despite higher headline inflation from the Oil shock. The central bank is seen focusing on second-round effects and inflation expectations, while fiscal policy should deliver targeted, temporary support instead of broad, open-ended subsidies.

Central bank to look through first-round spike

"In our baseline, we still expect the central bank to keep the policy rate at 1.00% in 2026."

"For BoT, the key question is not the first rise in headline inflation itself, but whether the shock broadens into transport fares, prepared food, service prices, wage-setting, or inflation expectations."

"In policy terms, the appropriate mix is likely patient monetary policy and more targeted fiscal support."

"On the fiscal side, targeted and temporary relief for vulnerable households, public transport, and other sensitive users is preferable to a broad subsidy regime that becomes harder to finance and less transparent over time."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)