Thailand: Supply-led pressures and prolonged hold for BoT – UOB

FXStreet Insights Team FXStreet

UOB Global Economics & Markets Research, led by economists Enrico Tanuwidjaja and Sathit Talaengsatya, analyzes Thailand’s July CPI undershoot driven by lower fuel prices while core inflation edges higher. They emphasize that inflation remains supply-led, with upstream PPI still elevated, and maintain forecasts for headline CPI at 2.8% in 2026 and 1.4% in 2027 alongside a steady BOT policy rate at 1.00% through end-2027.

Supply-led CPI and policy outlook

"Jul headline CPI eased to +1.95% y/y and -0.73% m/m, from +2.42% y/y and - 0.34% m/m in Jun, undershooting the +2.55% Reuters consensus and the BOT’s earlier monthly reference path. Core CPI nevertheless firmed to +1.34% y/y and +0.08% m/m, signaling continued, albeit contained, indirect cost pass-through."

"The BOT’s Jun baseline projects headline inflation at 2.8% in 2026 and 1.4% in 2027, and core inflation at 1.5% and 1.4%, respectively, as supply pressures and unfavorable base effects fade next year."

"We maintain our headline CPI forecasts at 2.8% in 2026 and 1.4% in 2027 and expect the BoT to hold its policy rate at 1.00% through end-2027. The principal swing factors remain oil, THB, and the current account—not a domestic demand-led tightening cycle."

"A prolonged hold therefore offers the best balance between maintaining price stability and avoiding an unnecessary tightening of already-fragile financial conditions."

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

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold keeps the bid tone in place; still below $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains just below the $4,400 mark per troy ounce on Friday. The precious metal’s advance finds traction in declining crude oil prices and fresh selling pressure on the US Dollar.

Why altcoin season isn't coming back — and what stole its capital

If, after two years of being frozen in ice, Katara and Sokka woke you up to the crypto market, it would seem like 100 years have passed. With Bitcoin soaring to record highs just over a year ago, everyone expected a routine altcoin season, where investors take profits from the top crypto to chase higher returns in altcoins.

BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.