The Monetary Policy Committee (MPC) is expected to cut the policy interest rate at one of its three remaining meetings scheduled for this year to help the struggling economy amid a worsening pandemic, says Asia Plus Securities (ASPS).
A rate reduction would benefit shares in leasing, real estate and exports, though it would hurt stocks of major commercial banks and insurance, according to ASPS.
Therdsak Thaveeteeratham, executive vice-president of ASPS, said the MPC is likely to cut interest rates at one of its three scheduled meetings this year: Sept 29, Nov 10 or Dec 22.
He said the November meeting is the most likely candidate for three reasons.
First, the Thai economy faces great uncertainty during the pandemic and many economic analysts have downgraded their GDP projections, said Mr Therdsak.
The Bank of Thailand slashed its 2021 GDP projection to 0.7% from 1.8%, in line with the declines of many leading economic indices.
The Commerce Ministry reported the July inflation rate was 0.45% from the same period last year, a deceleration from 1.25% the previous month and remaining on a declining trend for the third consecutive month.
Core inflation decelerated to 0.14% in July from 0.52% the previous month.
The second reason for Mr Therdsak's prediction is the MPC already signalled at its most recent meeting on Aug 4 a rate cut is possible, with two dissenting members voting to cut rates, resulting in a 4-2 majority vote for the first time in 15 months.
The divergence indicates some members have started to change their views, he said.
Finally, the financial markets have started to price in the prospect of lower interest rates.
After the MPC's latest meeting, the Thai one-year bond yield fell to 0.468%, below the current policy rate of 0.5%, which is the lowest level in a month-and-a-half.
The baht also continued to depreciate, falling by 1.1% month-to-date in just four days.