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International
Thailand Central Bank Sees Heightened Risks to Economy Amid Middle East Conflict Impact
Thailand's central bank decided to keep the current policy rate unchanged at 1% amid increasing uncertainty arising from the Middle East war, according to minutes from the Monetary Policy Committee meeting held April 24 and 29.The conflict in the Middle East has led to a significant rise in energy prices globally, a negative impact on the travel industry, and logistics issues, including shortages of raw materials. The Thai economy, along with other Asian economies, has been severely impacted due to a high dependence on energy and commodity imports from the Middle East, the minutes revealed.Under the baseline scenario in which the situation improves in the first half of 2026, the central bankers now expect Thailand's economy to expand at a slower pace of 1.5% and 2%, respectively, in 2026 and 2027, according to the minutes.Overall credit growth is also expected to remain subdued in 2026 as financial institutions remain cautious with lending.Headline inflation is projected to increase to an average of 2.9% in 2026, followed by a drop to 1.5% in 2027.The country's economy faces heightened risks due to the potential of prolonged war and continued supply disruptions.The committee believes the challenges arising from the war can be addressed through a coordinated policy mix, including monetary policy, fiscal policy, and targeted financial measures."The Committee maintained that consumption-based stimulus offered only transient economic support. Instead, policy should prioritize structural transformation and the preservation of fiscal space given the prevailing global uncertainty," the minutes stated.
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International
April US Producer Price Index, Core PPI Both Rise More Than Expected, Year-Over-Year Rates Accelerate
The US Producer Price Index rose by 1.4% in April following a 0.7% gain in March, well above the 0.5% gain expected in a survey compiled by Bloomberg as of 7:35 am ET.Energy prices increased by 7.8% in the month, slower than a 10.1% gain in March. Gasoline prices slowed to a 15.6% gain from 19.2% gain in March but still indicates rapid price acceleration. Food prices rebounded by 0.2% after a 0.6% decline in the previous month.After excluding food and energy prices, core PPI jumped by 1.0% from 0.2% gain in the previous month, well above the 0.3% gain expected.PPI was up 6.0% year-over-year in April while core PPI rose by 5.2% year-over-year, both well above their respective March rates and the strongest readings since December 2022. The year-over-year rate for PPI excluding food, energy and trade services increased to 4.4% from 3.7% in the previous month, the fastest rate since February 2023.The monthly producer price index, or PPI, reported by the Bureau of Labor Statistics measures the index level of prices received by producers for products such as energy, food, vehicles, and services. The core measure, excluding the volatile food and energy components, is a measure of underlying inflation.Sharply higher prices are a sign of demand, but an increase at the producer level without a pass-through to the consumer level would suggest smaller profits at the retail level. As a result, the stock reaction depends on the movements at both levels. Higher inflation is generally a negative for bonds.
International
German Current Account Surplus Rises in March
Germany's current account surplus totaled 23.6 billion euros in March, up by 3.1 billion euros from the previous month, the Deutsche Bundesbank said Wednesday.The German central bank attributed the movement to a lower surplus in merchandise trade, alongside a positive balance in so-called invisible current account transactions.
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