The Bank of Thailand (BoT) meets this week and we, like the market, expect that they will move the policy rate up by 25bp to 1.5%. The social unrest in April-May appears to have inflicted little long-term damage on the economy, which we always thought would be the case. Political instability has not disappeared but should stay lower profile ahead of new elections which are now unlikely to take place before early 2011. The economic recovery should be sustained and will probably stay strong while inflation pressures are likely to rise.
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