Asia - Thai interest rates still to fall further than expected (May 07)

Inflation is well contained across most of the region, raising the prospect of further interest rate cuts over the coming months. We expect the next move in Korean rates to be down, albeit not until towards the end of the year. The Philippines should also see a cut in the benchmark interest rate fairly soon, while Indonesian rates are likely to continue falling. Meanwhile, slowing growth and local currency strength should mean that Thai interest rates are cut further than the markets are expecting. Finally, there are also signs that inflation is easing in India. However, continued strong activity and credit growth, alongside surging asset prices, mean that policy is still likely to be tightened further there.