Thai Baht: BoT holds rates as curve steepening risks – DBS

DBS Group Research economist Chua Han Teng analyzes Thailand Markets after the Bank of Thailand (BoT) kept its policy rate at 1.00% for a fourth consecutive meeting. He expects the BoT to remain on hold through 2026, keeping short-end government bond yields stable, while warning that long-end yields face steepening risks from global energy, food prices and US Treasury spillovers.

BOT stance and yield curve outlook

"The Bank of Thailand (BoT) maintained its policy rate at 1.00% for the fourth consecutive decision on October 28, with limited impetus for any adjustment in the near term."

"We continue to expect the BoT to keep its policy rate at 1.00% for the remainder of 2026, providing a stable backdrop for short-end government bond yields."

"We see steepening risks for Thailand’s yield curve."

"While short-end government bond yields should be stable, long-end yields are vulnerable to upward pressures from external challenges, including the pass-through effects of global energy and food price shocks, spillovers from higher and elevated US Treasury yields, and weak domestic public finances."

"The Thai baht, which has depreciated by ~7% against the US dollar and underperformed its regional peers year-to-date, is unlikely to be a major policy concern, given strong external buffers that should help mitigate currency volatility and related risks."

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