According to meeting minutes released on Wednesday, Thailand’s rate committee hiked its benchmark interest rate late last month and stated that additional monetary tightening will be gradual and measured, but can be changed if necessary.
The one-day repurchase rate was increased by a quarter point to 1.25% on November 30 by unanimous vote of the monetary policy committee of the Bank of Thailand (BOT) in order to reduce inflationary pressures. The policy will be reviewed again on January 25, when most economists anticipate another increase.
According to the minutes, the committee predicted that in the second half of 2023, headline inflation would drop and revert to the central bank’s goal range of 1% to 3%.
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Since August, the BOT has increased the key by a total of 75 basis points. Given that Thailand’s economic recovery has lagged behind that of other Southeast Asian nations and that its key tourism sector has only recently begun to recover, the tightening cycle has been less pronounced than that of many of its regional peers.
In the minutes, it was said that “the Thai economic recovery would continue to gain momentum, with tourism and private spending as major drivers that would assist in mitigating the impact of the global recession.”
In contrast to earlier projections of 3.3% and 3.8%, respectively, the central bank’s forecast for economic growth this year and in 2023 was 3.2% and 3.7%, respectively.
The 1.5% growth rate from the previous year was one of the lowest in the area.
