The Bank of Thailand (BoT) raised its policy rate by 25bp to 1.75% today, as expected. The economy has shrugged off the political crisis and domestic demand should improve even as exports slow. The BoT also highlighted increased concerns about inflation. The upshot is that we expect more monetary policy tightening and further baht appreciation. On the face of it, this will be a challenge for equities but we still suspect that Bangkok stocks will end 2010 higher than current levels.