TISCO Predicts US Interest Rate to Stay at 19% in August Amid Thai Trade Success

Bangkok: TISCO estimates that the Monetary Policy Committee (MPC) will maintain the US interest rate at 19% in August. According to Thai News Agency, Paiboon Nalinthrangkurn, Chief Executive Officer of TISCO Securities Co., Ltd., praised the Thai trade negotiation team for their performance in recent US trade discussions. He commended Deputy Prime Minister Pichai and the team for securing a satisfactory tariff rate for Thailand, which is notably lower than that of its main competitor, Vietnam. This achievement is expected to provide Thailand with a competitive edge in exports and encourage multinational companies to consider Thailand as a viable production base for exports. Paiboon urged efforts towards economic stimulation in the latter half of the year, including addressing household debt and establishing foundations for long-term economic restructuring. TISCO Securities' analysis views the 19% tariff rate agreement as satisfactory, suggesting that Thai operators will remain competitive within the region . However, the specifics of the agreement and its varied impacts on different industries are yet to be detailed. The US import tariffs on Thai goods, previously averaging around 2%, were raised to 10% in response to Trump's tariff policy and eventually agreed upon at 19%. This increase, nearly tenfold from the previous rate, is expected to impact Thai exports significantly. Despite the challenges posed by the new 19% tariff, TISCO believes the Thai economy is poised for growth, potentially exceeding the 1.6% forecast for this year and 1.4% for next year, reaching 1.9% and 1.6% respectively. TISCO continues to monitor the domestic political landscape and the recovery of the tourism sector closely. Regarding Thailand's monetary policy, the 19% tariff aligns with the Bank of Thailand's baseline economic scenario. With the Monetary Policy Committee having already cut the policy interest rate by over 0.75%, further policy adjustments are limited. The likelihood of maintaining the policy interest rate at the upc oming August 13 meeting is significant. However, it is anticipated that Thailand's policy interest rate could be reduced to 1.25% by year-end, down from the current 1.75%. There is speculation about extending the rate cut to two meetings, with the final meeting of the year in October and December, when Vitai Ratanakorn is set to take over as BoT Governor.