The Bank of Thailand (BOT) has said it will gradually raise interest rates to curb higher inflation and ensure no disruption to an uneven post-pandemic economic recovery, ruling out an off-cycle policy meeting for now.
According to BOT Governor Sethaput Suthiwartnarueput, the recovery – while clearer – is still not broad-based, with the export sector performing better than pre-pandemic levels while tourism remains low, although recovering faster than expected.
He told a news conference that raising rates would help anchor inflation expectations, adding there was no need for a special rate meeting ahead of the scheduled August 10 policy meeting, as factors to watch remained within forecasts.
The Bank of Thailand is expected to raise its key interest rate from a record low of 0.50% at the next meeting, which would be the first hike since late 2018.
Sethaput also said inflation is expected to peak in the third quarter, averaging at 7.5%, above the BOT’s target range of 1-3%, and the BOT will prevent it from rising steadily.
He noted that the inflation impact is seven times that of rate hikes, adding that inflation would undermine purchasing power.
In June, the BOT predicted economic growth of 3.3% this year and 4.2% for 2023. It saw headline inflation at 6.2% this year and 2.5% in 2023.
However, Sethaput said Southeast Asia’s second-largest economy may grow faster than forecast this year as foreign tourist numbers could beat the BOT’s 6 million estimate.(NNT)
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