Thailand hikes rate for first time since 2018 to tame hot inflation

Thailand’s central bank raised its key interest rate for the first time in nearly four years on Wednesday, lifting it by a quarter point as expected to fight surging inflation as the economic recovery gains momentum.

The Bank of Thailand (BOT), which had been among Asia’s least hawkish central banks, finally joined most of its peers in raising rates as consumer inflation hovers near 14-year highs, though it stressed further hikes will be gradual, Reuters reports.

The monetary policy committee (MPC) voted 6-1 to increase the one-day repurchase rate to 0.75% from a record low of 0.50%, which had been unchanged since May 2020.

One member voted to raise the policy rate by 0.50 percentage point. The rate was last raised in December 2018.

Seventeen of 20 economists surveyed by Reuters had expected a quarter-point hike, with the remaining predicting a half-point rise.

The Southeast Asian country had maintained its policy focus on supporting the economic recovery, which has lagged that of its neighbours due mainly to tourism curbs during the COVID-19 pandemic. The vital tourism sector has just begun to recover this year as restrictions were eased.

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