Bank of Thailand watch: Squeeze-louise

Research evidence excerpt

Bank of Thailand watch: Squeeze-louise

18 June 2026

Bank of Thailand watch EconomicsThailand

Squeeze-louise

◆ Despite strong growth and higher inflation, we expect the BoT Aris Dacanay

to keep monetary policy unchanged at 1.00% next week Senior ASEAN Economist The Hongkong and Shanghai Banking Corporation Limited

aris.dacanay@hsbc.com.hk

◆ Many firms have found it difficult to pass higher input costs +852 3945 1247

on to consumers, squeezing business margins Akiko Kitamura

Economist, Asia

The Hongkong and Shanghai Banking Corporation Limited

◆ Monetary policy is likely to remain accommodative, with the akiko.kitamura@hsbc.com.hk

energy shock eventually taking a toll on private investment +852 2996 6676

We expect the Bank of Thailand (BoT) to keep the monetary reins loose by

keeping its monetary policy unchanged at 1.00% when it meets on 24 August

2026. This isn’t because growth has underperformed. In fact, 1Q26 growth exceeded

expectations on the back of strong private investment and exports (see Thailand GDP,

18 May 2026). It is also not because of manageable inflation. Although Thai CPI

softened in May, headline inflation is likely to break the upper bound rate of the BoT’s

1-3% target band eventually, when the lagged impacts of higher fertiliser prices and

the El Niño season take a toll on food supply (see Thailand CPI, 5 June 2026).

We expect the BoT to remain on hold next week, and even throughout 2026 and

2027 because of a wobbly growth outlook. We discussed in our latest commentary

how Thailand’s fiscal engines will soon take a much-needed break, which then risks

straining potential growth (see Thailand's private sector must lead the post-Hormuz

recovery, 8 June 2026).

However, private investment also faces significant challenges ahead. Investment