Thailand’s central bank lifted its key interest rate by another quarter point to the highest level in a decade and hinted that rates are unlikely to be raised again as inflation remains below target.
The Monetary Policy Committee of the Bank of Thailand unanimously voted to raise the benchmark rate to 2.50 percent from 2.25 percent.
This was the eighth consecutive hike. The interest rate has been lifted by 200 basis points since August 2022.
“…the Committee deems the current policy interest rate to be appropriate for supporting long-term sustainable growth,” the bank said.
Although the economic growth softened somewhat this year due to delayed recovery in exports and tourism, the central bank expects it to pick up next year driven by private consumption.
The bank lowered its 2023 growth outlook to 2.8 percent from 3.6 percent. Meanwhile, the projection for 2024 was upgraded to 4.4 percent from 3.8 percent.
Headline inflation is forecast to remain within the target range at 1.6 percent and 2.6 percent this year and next year, respectively. Core inflation will pick up to 2.0 percent next year from 1.4 percent in 2023, the bank said.
The bank cited demand-side pressures related to government economic policies and higher food inflation as upside risks to inflation.
At 0.9 percent, consumer price inflation in August remained well below the central bank’s target of 1-3 percent.
With inflation below target and headwinds to the economic recovery mounting, interest rates are set to remain on hold until well into next year, Capital Economics’ economist Gareth Leather said.
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