Rising inflation in both the US and Thailand is prompting investors to rethink portfolio allocation, as analysts increasingly believe the global interest rate easing cycle has come to an end.Therdsak Thaveeteeratham, executive vice-president of Asia Plus Securities, said inflationary pressure driven by rising production costs, or cost-push inflation, is expected to intensify through the end of the year, limiting the ability of central banks to cut rates.
Thailand's inflation could accelerate to 4% by October, in line with rising producer prices, while policymakers are expected to keep the benchmark interest rate unchanged at 1% to balance weak economic growth against inflation risks, he said.
Raising interest rates would place additional pressure on the fragile Thai economy, while further cuts could reignite inflation, said Mr Therdsak. As a result, both the Bank of Thailand and the Federal Reserve are likely to maintain a cautious policy stance for the remainder of the year.
With rates expected to remain elevated for longer, he recommends shifting portfolios towards banking stocks and high-dividend equities, which are viewed as more resilient than fixed-income assets in an inflationary environment.
