Bank of Thailand raises key policy rate by 25 bps to 2%

• May 31, 2023

THAILAND’S central bank raised its key interest rate by 25 basis points for a sixth consecutive meeting on Wednesday (May 31), to curb inflation risks as its economic recovery gathers strength against rising global uncertainties.

The Bank of Thailand’s (BOT) monetary policy committee voted unanimously to raise the one-day repurchase rate to 2.00 per cent.

Of the 22 economists polled by Reuters, 17 had expected the BOT to raise the benchmark rate a quarter point while the remaining five had forecast no change.

With Wednesday’s move, the BOT has raised its key rate by a total of 150 basis points since August.

A gradual, measured policy normalisation toward a level consistent with long-term sustainable growth was still appropriate, the central bank said in a statement, adding that it was ready to adjust its stance as necessary.

It also predicted headline inflation at 2.5 per cent this year, compared with 2.9 per cent seen in March, while maintaining its earlier forecast of 2.4 per cent for 2024.

Headline inflation dropped to a 16-month low of 2.67 per cent in April, inside the BOT’s target range of 1 per cent to 3 per cent.

South-east Asia’s second-largest economy expanded faster than expected in the first quarter this year as the tourism sector gathers momentum, with the return of Chinese tourists. REUTERS