Citibank Thailand expects the Bank of Thailand to keep its policy rate steady for two years, in line with a gradual economic recovery and no inflationary pressure.
For the medium term, the central bank will make interest rate moves based on assessments of the country's economic situation, said the corporate bank.
Citibank predicts the central bank will hold its policy rate unchanged through 2025 under its base-case economic projection for the next eight quarters, said Nalin Chutchotitham, economist at Citibank Thailand.
The policy rate is currently 2.5%, the highest level in a decade, following eight successive quarter-point increases from 0.5% in August 2022.
Citibank expects the central bank to maintain its policy rate this year based on the gradual recovery of the Thai economy, with inflation slowly expanding to the regulator's target range of 1-3%.
In 2024, Citibank assesses GDP growth at 3.6% and inflation at 1.7%.
Ms Nalin said the growth outlook is attributed to the ongoing rebound of tourism, exports and private investment as a result of improving global demand and the strong manufacturing sector.
Another factor is the low-base effect for 2023 growth, she said.
The bank expects foreign tourist arrivals this year of 35.2 million, export growth of 3.3%, private investment expanding 3.1%, and government spending rising 2.8%.
The economic growth projection does not include the government's digital wallet handout scheme.
"Based on the uncertainty of the government's handout scheme, the bank did not factor the programme into its 2024 economic assessment," said Ms Nalin.
"If the cash giveaway is not implemented this year, we expect the government to replace the scheme with other short-term stimulus measures."
She said elevated interest rates would create higher risk for local corporate bond rollovers.
However, the risk should be limited and not affect the overall financial system, said Ms Nalin.
Johanna Chua, head of emerging market economists and chief economist at Citigroup, expects the US Federal Reserve to cut its policy rate by a quarter of a percentage point five times this year, starting in June.
For Asia's economic outlook this year, the bank predicts 4.6% growth attributed to improving global demand and a growing manufacturing sector, she said.
Meanwhile, Sitichok Tachasirinugune, country head of Citicorp Securities (Thailand), said the company expects the SET index to hit 1,507 points this year, with foreign investors returning to the Thai market partly based on valuation factors.
The company recommends investors opt for real estate investment trusts, healthcare and industrial estates.