The Bank of Thailand (BOT) says it is highly likely to raise its key policy rate at its August meeting, as other central banks move to tighten their monetary policy.
According to BOT Senior Director Don Nakornthab, weakness in the baht is still in line with those of trade partners and competitors, with the central bank ready to intervene if the Thai currency weakens too much.
The senior director said that if the baht weakens to 37 to the dollar but still moves in line with regional peers, the monetary policy committee (MPC) might overlook that as a factor in their decision because they usually watch currency competitiveness.
He added that the MPC would be deliberate in deciding how much the rate should be hiked, as Thailand’s economic recovery has lagged that of other countries.
Don said, “Chances are quite high for a rate hike in August, but by how much, the committee will have to consider.”
On Monday (11 July), BOT Governor Sethaput Suthiwartnarueput said Thailand would only gradually hike its key rate to tackle inflation and ensure an uninterrupted economic recovery.
Despite out-of-cycle policy tightening by other central banks, the BOT said earlier on Thursday (14 July) that it saw no need to call an urgent meeting to review policy before the next scheduled meeting on August 10, when economists expect a rate hike from a record low of 0.50%.
Singapore and the Philippines both announced out-of-cycle rate hikes on Thursday to tackle rising inflation.(NNT)
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