The Bank of Thailand (BoT) is widely expected to keep rates steady this week. Indeed, there is no reason why the central bank will tinker with its policy rate at any point this year. The pick-up in private consumption growth in 1Q17 must have been pretty encouraging for the central bank.

And while private investment remained poor (-1.1 percent in Q1 2017), news that some of the major commercial banks have lowered their key lending rates by as much as 50 basis points is supportive of the outlook ahead. Even if growth remains below potential, sentiment has improved compared to the start of the year, DBS reported.

The BoT seems comfortable with GDP growth coming in circa 3.5 percent this year (DBS forecast: 3.4 percent). Furthermore, headline inflation is expected to remain below target, staying sub-2 percent in 2017 and just about 2 percent in 2018. Despite the clear upward trend in inflation then, the BoT has little to worry for now. Until there is a stronger impact from higher export earnings on household income, wage growth is likely to remain sluggish at a mere 1-2 percent.

"Not surprisingly, demand-pull inflationary pressure is pretty much nonexistent. This has been factored into the BoT’s policy setting, and thus, we see limited risks of any rate hike for now," the report said.