Responding to current inflationary trends and the depreciating baht, the Bank of Thailand has raised the policy interest rate by 0.25% as widely expected. The rate increase by the Monetary Policy Committee (MPC) takes the policy rate to 1 percent per year. The central bank has also indicated it will gradually raise the policy rate to accommodate economic expansion.
MPC Secretary Piti Disyatat said the MPC meeting unanimously resolved to raise the policy rate by 0.25%. This takes immediate effect, sending the policy rate to 1 percent from 0.75% previously. Mr. Piti said the MPC reasoned that the economy has been gradually recovering predominantly due to momentum in the tourism sector and private consumption. The MPC acknowledges headline inflation remains high and overall economic and inflationary tendencies closely resemble earlier evaluations. Mr. Piti said the MPC views that raising the policy interest rate remains the appropriate policy action to take. It, therefore, endorsed the 0.25% increase to the policy interest rate.
The MPC secretary said the committee remains ready to adjust the scope and timing of policy rate increases if economic and inflation projections shift in the future. At the moment, however, the MPC intends to gradually raise the policy rate to a level conducive to economic expansion.
According to Mr. Piti, Thailand’s economy looks set to expand by 3.3% in 2022 and 3.8% in 2023. The tourism sector has been recovering well, with foreign tourist figures continuing to increase. Economic recovery has become broader in scope, with the services sector now also experiencing recovery. Mr. Piti added that income dissipation is also starting to improve. (NNT)