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Thailand’s central bank announces third consecutive policy rate hike



Bank of Thailand

Thailand‘s central bank decided on Wednesday to raise its key policy rate for the third time in a row, by 0.25 percentage point, in an effort to balance efforts between easing inflation and supporting economic growth.

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The Bank of Thailand’s (BOT) monetary policy committee voted unanimously to raise the policy rate from 1 percent to 1.25 percent, effective immediately.

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The move followed a 0.25 percentage point rate hike announced at the monetary policy committee meeting on September 28 and another on August 10, the country’s first rate hike since late 2018.

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Wednesday’s rate hike, in line with market expectations, brought the official benchmark rate to its highest level since February 2020.

Thailand’s economic recovery has continued to gather strength, with tourism and private consumption remaining key economic drivers, while the financial system is resilient, but headline inflation is expected to be higher than the previous projection by 2023 due to the domestic energy prices, the BOT said in a statement on its website.

The statement said a gradual policy normalization remains an appropriate course for monetary policy given the outlook for growth and inflation, adding that the size and timing of policy normalization will be adjusted if necessary.

Thailand’s inflation growth slowed to 5.98 percent in October, from 6.41 percent in September and a 14-year high of 7.86 percent in August.

The central bank expected headline inflation to rise to 6.3 percent on-year in 2022, before falling to 3 percent in 2023 and 2.1 percent in 2024. It expected the economy to grow 3.2 percent. in 2022, 3.7 percent in 2023, and 3.9 percent in 2024. ■


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