Breaking News
Investing Pro 0
💎 Reveal Undervalued Stocks Hiding in Any Market Get Started

Thai central bank raises key rate, trims growth outlook on global slowdown

Economy Nov 30, 2022 05:22AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: The Bank of Thailand logo is pictured in Bangkok, Thailand, August 5, 2016. Picture taken August 5, 2016. REUTERS/Chaiwat Subprasom/File Photo

By Orathai Sriring and Kitiphong Thaichareon

BANGKOK (Reuters) - Thailand's central bank raised its key interest rate by 25 basis points for a third straight meeting on Wednesday, as it tries to contain above-target inflation while supporting an economic recovery facing increasing global headwinds.

The Bank of Thailand's (BOT) monetary policy committee voted unanimously to raise the one-day repurchase rate to 1.25%, as widely expected in a Reuters poll.

The BOT trimmed its growth forecasts for this year and next, pointing to downside risks to the global outlook, but expected the strength in the tourism sector to lessen the impact of any global slowdown. It raised its inflation forecast for 2023, even as it expected inflation to return to within target next year.

"The Committee deems that a gradual policy normalization remains an appropriate course for monetary policy given the growth and inflation outlook," the BOT said in a statement.

With Wednesday's move, the BOT has raised rates by a total of 75 basis points since August.

But the tightening cycle has been less aggressive than many of its regional peers as Thailand's economic recovery has lagged that of other Southeast Asian countries, with its crucial tourism sector only starting to rebound this year.

Graphic: Thai central bank delivers third straight rate hike https://graphics.reuters.com/THAILAND-ECONOMY/RATES/zjpqjkgkbvx/chart.png

Thailand's economy is expected to expand 3.2% in 2022 and 3.7% in 2023, Assistant Governor Piti Disyatat told a news conference. That was down slightly from previous forecasts for 3.3% growth this year and 3.8% next year.

The BOT raised its 2023 inflation forecast to 3% from 2.6% previously, Piti said, even as Thailand's consumer price index rose at its slowest pace in six months in October. At 5.98% year-on-year, the headline consumer inflation remained above the central bank's 1%-3% target last month.

The central bank said in the statement it would "continue to closely monitor risks to inflation, especially a potential increase in cost pass-through as well as domestic energy prices which remain uncertain."

Gareth Leather, senior Asia economist at Capital Economics, said the comments made the central bank sound "a little more hawkish on inflation than in previous meetings".

"The BoT faces a difficult balancing act over the coming months. It needs to keep raising interest rates to help contain inflation, while ensuring that it doesn't kill off the economic recovery by tightening too quickly," he said, adding he expected interest rates to peak at 1.75%.

Kobsidthi Silpachai, head of capital markets research of Kasikornbank, saw the BOT increasing rates by another 50 bps in 2023.

"Given the heightened uncertainties surrounding the global economy, the Committee is ready to adjust the size and timing of policy normalization should the growth and inflation outlook shift from the current assessment," the BOT said.

The baht was up 0.5% after the rate hike while Thai stocks stood 0.5% higher at 0803 GMT. The BOT said the currency remained highly volatile and was being closely monitored.

The BOT said tourism and private consumption will continue to be "key economic drivers" going forward.

It forecast foreign tourist arrivals of 10.5 million this year, and 22 million in 2023, up from previous forecasts of 9.5 million and 21 million, respectively. Some 40 million foreign tourists visited Thailand in 2019.

The central bank expected exports to rise 7.4% this year and 1.0% next year. It had previously forecast export growth of 8.2% in 2022 and 1.1% in 2023.

Thai central bank raises key rate, trims growth outlook on global slowdown
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email