The Bank of Thailand (BOT) delivered another 25 basis-point rate hike on Wednesday (28 Sep), its second in a row, even as many of its peers opt for larger increases to fight high inflation.
Despite inflation in Thailand jumping to a 14-year high in August, the recovery in Southeast Asia’s second-largest economy has lagged that of others, prompting the BOT to move slowly on rate hikes.
BOT Governor Sethaput Suthiwartnarueput said earlier this month that the central bank’s rate rises would be gradual and measured to ensure the economy’s smooth recovery, which he expects to return to pre-pandemic levels late this year or early 2023.
His rate view matched the majority outlook in the September 19-26 Reuters poll of economists.
Down nearly 11% this year, the baht hit its lowest level in nearly 16 years last Wednesday (21 Sep). A weaker currency keeps imports expensive and inflation elevated.
While exports and tourism benefit from a weak local currency, sticky inflation erodes real incomes and exacerbates inequality and poverty.
Economists nevertheless expect the BOT to continue on its hiking path well into next year with small increments of 25 bps, taking the rate to 2.00% by the end of 2023. (NNT)
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