Thailand Above Target Inflation and Monetary Policy Tightening

ANZ expects the Bank of Thailand to raise interest rates starting in August 2026 as headline inflation is projected to reach 3.73% this year. Rising fuel costs, producer price pressures, and significant new fiscal stimulus are driving the shift toward a more hawkish policy stance.

Key Takeaways

• 1.ANZ has revised Thailand's 2026 CPI inflation forecast upward to 3.73%, driven by surging fuel prices and second-order effects.
• 2.The Bank of Thailand (BoT) is expected to commence monetary policy tightening in August 2026 to anchor rising inflation expectations.
• 3.New fiscal stimulus, including a co-payment scheme and THB400bn in emergency borrowing, strengthens the case for higher interest rates.

Table of Contents

• Thailand Insight
• Thailand: above target inflation will prompt monetary policy tightening
• Inflation to breach the upper bound of target in Q2
• Producers can absorb costs but there are limits
• BoT might not be able to hold for long
• Important Notice

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