Thailand Central Bank Hikes Rate For Seventh Straight Meeting

(RTTNews) - Thailand's central bank raised its benchmark interest rate for the seventh straight meeting on Wednesday amid rising concerns about upside risks to inflation.

The Monetary Policy Committee of the Bank of Thailand unanimously voted to lift the policy rate by 25 basis points to 2.25 percent.

This was the seventh consecutive rate hike. The bank has lifted the benchmark rate by a cumulative 175 basis points since August 2022.

The interest rates are set to remain on hold for the rest of the year as inflation stayed well below the target amid mounting headwinds to the economic recovery, Capital Economics' economist Gareth Leather said.

Although the external demand softened somewhat in the near-term, the bank expects it to recover gradually. Inflation is projected to stabilize within the target range, subject to upside risks.

Consumer price inflation eased to 0.2 percent in June from 0.5 percent in May, while the central bank targets to keep inflation between 1.0 percent and 3.0 percent. However, the central bank said inflation will rebound in the second half of this year after the effects of temporary factors dissipate. The bank sees upside inflationary risks stemming from higher food prices amid a more severe El Nino episode.

Amid continuing economic growth and narrowing slack, the monetary policy should keep inflation sustainably within the target range and support longer-term macro-financial stability, the bank said.

"A higher policy rate would also help preserve the policy space in light of the highly uncertain outlook," the bank added.

"The Committee therefore voted to raise the policy rate by 0.25 percentage point at this meeting," said BoT.