Commerzbank’s Charlie Lay highlights that USD/THB edged higher as Thai inflation data support a steady policy stance. Lay links the move to expectations that the Bank of Thailand (BoT) will keep interest rates on hold at 1% through at least the next meeting.

USD/THB trading near range highs

"Thailand's headline inflation eased for a second consecutive month in June to 2.4% yoy (Bloomberg consensus: 2.7%) from 2.8% in May. It remained comfortably within the Bank of Thailand's (BoT) 1-3% target range. Year-to-date, it averaged 1.1%. Inflation has picked up steadily since April after posting negative readings from April 2025 to March 2026."

"It is expected to stay above 2% in the coming months and possibly throughout the second half, aided by the lower base last year. Food prices held steady at 1% yoy, at the same pace as May. Non-food prices moderated to 3.3% vs 4% previously. Energy prices slowed to 13.7% yoy from 18.1% previously. This is expected to moderate further and should help contain the upside in overall inflation."

"Core inflation, which strips out food and energy, was slightly higher at 1.2% yoy (Bloomberg consensus: 1.1%) from 0.9% previously. Looking ahead, the Ministry of Commerce maintained its 2026 inflation forecast of 1.5-2.5%. Lower electricity tariffs and abundant meat supplies should also help contain price pressures."

"From a monetary policy perspective, the June data reinforce the case for BoT to keep interest rates on hold at 1% at the next meeting on 26 August, and possibly through year-end. The key risk factors remain a rebound in energy costs or higher food prices due to El Niño. Policymakers are likely to view the recent rise in inflation as manageable and the current policy setting as supportive of the economy."

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