KGI's perspetcive:
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The MPC kept its policy rate unchanged at 1.50% The Committee voted unanimously to maintain the policy rate at 1.50%.

The Committee assessed that Thailand's growth outlook improved further due to a better export outlook while domestic demand continued to expand at a gradual pace and not yet sufficiently broad-based. Further improvements in the growth outlook were attributed to a more broad-based expansion in merchandise exports across various product categories and export destinations, and also driven by the swift recovery in tourism.

Private consumption continued to expand on the back of improvements in farm income. Nevertheless, non-farm income did not gain much from the export recovery, and thus overall purchasing power had yet to fully recover. Public expenditure remained an important growth driver. Meanwhile, private investment was projected to slowly pick up. Furthermore, the Committee would also closely monitor the impacts of tighter regulations on immigrant labor that were recently announced.

The BoT raised its economic growth forecast for this year to 3.5% from 3.4%, and upgraded its estimate for export growth to 5.0% from 2.2% projected three months ago. The BOT now predicts headline inflation at 0.8%, compared with 1.2% seen earlier. (Bank of Thailand, Bisnews)
Comment: The BoT sees no inflationary pressure this year and headline CPI should stay closer to the lower inflation target boundary. That is what the BoT signaled by keeping rate unchanged this year.

There is no reason to hike policy rate, the MPC could weigh concerns about economic growth rate and stability in the MPC meeting rather than headline inflation numbers, which is expected to move below the MPC�s inflation band of 1-4% closer to 0% or slightly below 0%.

The government and the BOT have preferred to see higher a GDP growth rate and lifting policy rate could trim the growth rate. We have said before that whenever the GDP growth rate is lower than 4%, the BoT will not lift its rate.

We expect the quarterly GDP growth rate to hover above 4% after 1H18 due to rising household purchasing power after the end of the first car scheme. We still believe the MPC will keep its policy rate unchanged at 1.50% through mid-2018.