DBS Group Research economist Chua Han Teng anticipates that the Bank of Thailand (BoT) will keep its policy interest rate unchanged at 1.00% through the end of 2026, citing stagflationary pressures resulting from Iran-related supply shocks that are impacting both growth and inflation in Thailand [1]. At its April 29 meeting, the BoT unanimously voted to maintain the policy rate at a near four-year low of 1.00% [1].
DBS has revised its 2026 inflation forecast for Thailand upward to 2.5%, compared to a previous estimate of 0.5%, reflecting expectations that annual average headline inflation will return to the BoT’s 1-3% target range for the first time since 2023 [1]. The research also projects GDP growth at around 1.6% for 2026, which is broadly in line with the BoT’s own projection of 1.5% [1].
The report highlights that the Thai economy is facing stagflationary dynamics, with supply-driven inflation acceleration and weaker economic growth attributed to disruptions in the Strait of Hormuz linked to the Middle East conflict [1]. DBS expects the BoT to remain cautious in adjusting interest rates in the coming months, unless there is a significant downturn in growth or a broadening of inflation pressures that could threaten medium-term inflation expectations [1].
CONCLUSION
DBS expects the Bank of Thailand to maintain its policy rate at 1.00% through 2026, as stagflation risks persist due to external supply shocks. Inflation is forecast to rise but remain within the central bank’s target range, while economic growth is projected to stay subdued. The BoT is likely to proceed cautiously with any future policy adjustments.