CNA – Thailand’s central bank raised its key interest rate by 25 basis points for a third straight meeting yesterday, as it tries to contain above-target inflation while supporting an economic recovery facing increasing global headwinds.
The Bank of Thailand’s (BOT) monetary policy committee voted unanimously to raise the one-day repurchase rate to 1.25 per cent, as widely expected in a Reuters poll.
The BOT trimmed its growth forecasts for this year and next, pointing to downside risks to the global outlook, but expected the strength in the tourism sector to lessen the impact of any global slowdown.
It raised its inflation forecast for 2023, even as it expected inflation to return to within target next year.
“The Committee deems that a gradual policy normalisation remains an appropriate course for monetary policy given the growth and inflation outlook,” the BOT said in a statement.
With yesterday’s move, the BOT has raised rates by a total of 75 basis points since August.
But the tightening cycle has been less aggressive than many of its regional peers as Thailand’s economic recovery has lagged that of other Southeast Asian countries, with its crucial tourism sector only starting to rebound this year.
Thailand’s economy is expected to expand 3.2 per cent in 2022 and 3.7 per cent in 2023, Assistant Governor Piti Disyatat told a news conference.
That was down slightly from previous forecasts for 3.3 per cent growth this year and 3.8 per cent next year.
The BOT raised its 2023 inflation forecast to three per cent from 2.6 per cent previously, Piti said, even as Thailand’s consumer price index rose at its slowest pace in six months in October. At 5.98 per cent year-on-year, the headline consumer inflation remained above the central bank’s one per cent- three per cent target last month.
The central bank said in the statement it would “continue to closely monitor risks to inflation, especially a potential increase in cost pass-through as well as domestic energy prices which remain uncertain”.
