Thai Baht Steady as Inflation Eases, BoT Holds Policy

Thai inflation eased to 2.4% yoy in June, within BoT’s target range. Core inflation rose to 1.2%. Commerzbank’s Charlie Lay expects BoT to hold rates at 1% through August’s meeting and possibly year-end, supporting steady USD/THB near range highs. • USD/THB Trend: Edged higher on easing Thai inflation data, supporting expectations of a steady BoT policy stance. • Inflation Data: June inflation eased to 2.4% yoy from 2.8% in May; core inflation rose slightly to 1.2% yoy; energy and non-food prices moderated. • Policy Outlook: Data reinforces case for BoT to hold rates at 1% through August meeting and possibly year-end, barring energy or food price shocks. Thailand’s headline inflation eased for a second straight month in June, falling to 2.4% year-on-year from 2.8% in May; coming in below the Bloomberg consensus of 2.7%. This keeps inflation comfortably within the Bank of Thailand’s (BoT) target range of 1-3%, with a year-to-date average of just 1.1%. According to Commerzbank’s Charlie Lay, this moderation follows a steady pickup since April, after negative readings persisted from April 2025 through March 2026. Food prices remained stable at 1% yoy, while non-food prices slowed to 3.3% from 4%, largely due to decelerating energy costs, which dropped to 13.7% yoy from 18.1% previously. Core inflation, excluding food and energy, ticked up slightly to 1.2% yoy, surpassing the 1.1% consensus estimate but still modest. The Ministry of Commerce has maintained its 2026 inflation forecast at 1.5-2.5%, citing supportive factors such as lower electricity tariffs and ample meat supplies that should help offset price pressures. Inflation is expected to remain above 2% for much of the second half of the year, partly due to a favorable base effect from last year’s weaker figures. However, easing energy costs are projected to further moderate overall price growth, reinforcing a relatively stable macroeconomic backdrop for Thailand heading into the latter half of 2026. Given these trends, Commerzbank expects the BoT to hold its policy rate at 1% during its upcoming meeting on 26 August, with the possibility of maintaining this stance through year-end. The central bank appears to view current inflation dynamics as manageable and supportive of broader economic activity, rather than warranting tightening. Nonetheless, risks remain, particularly from a potential rebound in global energy prices or unexpected food price increases linked to El Niño weather patterns. These factors could pressure inflation upward, though policymakers currently see limited urgency to adjust rates. As a result, USD/THB is expected to stay within recent trading ranges, with the currency pair currently hovering near its range highs as markets price in continued policy stability from the BoT. Source : Thai Baht: Range-bound after inflation data against dollar – Commerzbank