The Bank of Thailand is expected to keep interest rates steady as the nation lacks significant inflationary pressure, even as some regional central banks hiked rates to cope with rising prices.
Kobsak Pootrakool, senior executive vice-president and chief economist at Bangkok Bank, said the central bank would likely maintain its policy rate at 1% because Thailand has not faced the same inflationary pressures as several other countries in the region.
Bank Indonesia raised its benchmark rate by 50 basis points to 5.25% earlier this month, seeking to shore up the rupiah and contain inflation risks linked to higher oil prices and global economic uncertainty.
Meanwhile, the Philippine central bank raised its policy rate by 25 basis points to 4.5% in April, while signalling the possibility of another off-cycle rate hike due to rising inflation and peso weakness.
Thailand's headline inflation has consistently tracked below its regional peers, hovering near zero and even dipping into negative territory, ranking among the lowest in Southeast Asia.
The low inflation was attributed to a combination of government intervention, structural shifts, and unique domestic supply conditions rather than a weak economy. Headline inflation was 2.89% in April, the first increase in a year, as domestic fuel prices surged amid the prolonged blockade of the Strait of Hormuz, according to the Commerce Ministry.
Mr Kobsak said prices previously contracted before rising sharply in the second quarter of the year, driven by the global energy shock. However, headline inflation remains within the Bank of Thailand's target range of 1-3%.
Thailand's headline inflation could rise to 4-5% this year due to higher oil prices, though it is expected to gradually ease over the next 12 months.
The Bank of Thailand recently predicted headline inflation could accelerate and remain above the target range for 3-4 quarters, potentially rising to 4-5%. Headline inflation is projected to average 2.9% in 2026 before easing to 1.5% in 2027.
Core inflation is not expected to rise significantly due to weak purchasing power.
"Low inflation, low interest rates and baht depreciation against the US dollar support exports, tourism and agriculture, while helping to sustain Thailand's economic momentum," Mr Kobsak said.
According to Kasikorn Research Center (K-Research), Thailand ranks fifth among Southeast Asian economies in terms of increases in both headline inflation and electricity prices. In April, Laos recorded the highest headline inflation rate at 10.2% year-on-year, followed by the Philippines at 7.2%, Cambodia 5.8%, Vietnam 5.5%, Thailand 2.9%, Indonesia 2.4%, Singapore 1.8% and Malaysia 1.7%.
For power price hikes in April compared with January, the Philippines ranked first at 14.8%, followed by Laos at 4.9%, Malaysia 2.9%, Cambodia 2.1%, Thailand 0.3% and Indonesia 0.2%. Singapore contracted 0.1%.
For retail diesel prices, Laos recorded the sharpest increase at 150% as of May 11 compared with the end of January, followed by Malaysia at 79.5%, the Philippines 75.1%, Singapore 57.6%, Vietnam 53.8%, Cambodia 44.4% and Thailand 29.9%. Indonesia recorded no increase due to government subsidies.
K-Research said the impact varies across Southeast Asian countries depending on their reliance on energy imports and the extent of government subsidies.
"A renewed acceleration in inflation may lead central banks in several countries to maintain their policy interest rates at current levels or potentially raise rates. We expect the Bank of Thailand to keep its policy rate unchanged throughout this year," said Kanjana Chockpisansin, head of banking research at K-Research.
If tensions in the Middle East persist and energy prices rise, Southeast Asian countries may face stronger inflationary pressures in the second half of 2026, particularly those reliant on energy imports, she said.
