UOB’s Global Economics & Markets Research team, led by Enrico Tanuwidjaja and Sathit Talaengsatya, has analyzed Thailand’s latest Consumer Price Index (CPI) data and concluded that the country is experiencing cost-push, rather than demand-led, inflation. The team maintains its headline inflation forecasts at 1.4% for 2026 and 1.2% for 2027, and expects the Bank of Thailand (BoT) to keep its 1-day repo rate unchanged at 1.00% through 2026 and 2027 [1].
The authorities’ official 2026 inflation forecast remains at 1.5%–2.5%, with a midpoint of 2.0%, based on assumptions including Dubai crude at USD75–85 per barrel, USD/THB at 32.5–33.5, and GDP growth of 1.5%–2.5%. The latest end-May slide path put the 2026 average at 2.32% [1]. The BoT’s own outlook is more hawkish for the near term, expecting headline CPI at 2.9% in 2026, or 3.0% after incorporating government measures, before falling to 1.4% in 2027 as the energy shock and base effects fade [1].
UOB analysts emphasize that the May CPI data reinforce their view that Thailand is absorbing a negative terms-of-trade shock, not entering a domestic overheating cycle. They highlight that a rate hike would have limited impact on oil, freight, or food-input costs, while a broad-based rate cut would be difficult to justify with headline inflation near the upper end of the target range [1]. The BoT is expected to maintain its current policy stance as long as medium-term inflation expectations remain anchored and second-round effects do not broaden into wages, services prices, and FX pass-through [1].
No immediate market reaction or significant market-moving implications are discussed in the report. The analysis focuses on the rationale for a steady policy rate and the importance of monitoring energy costs, fiscal stimulus, wage-setting, services prices, and FX pass-through for future inflation dynamics [1].
CONCLUSION
UOB expects the Bank of Thailand to keep its policy rate unchanged at 1.00% through 2026 and 2027, citing supply-driven inflation and anchored expectations. The outlook suggests limited market impact in the near term, with attention focused on external cost pressures and potential second-round effects.