The Bank of Thailand (BoT) hiked its key interest rate for the first time in nearly four years on Wednesday (August 10), increasing it by a quarter percent to combat growing inflation as the economy recovers.
As consumer inflation remains at 14-year highs, the central bank finally joined most of its peers in raising rates, but it emphasized that the increases would be modest.
The monetary policy committee (MPC) of the BOT voted 6-1 to boost the one-day repurchase rate from a record low of 0.50%, which had remained steady since May 2020, to 0.75 percent.
The previous increase occurred in December 2018.
To reduce pricing pressures, the BoT had suggested a gradual tightening of monetary policy. The consumer price index (CPI) climbed 7.61% year-over-year in July, greatly exceeding its intended range of 1-3%. This increase was primarily attributable to rising energy prices.
Finance Minister Arkhom Termpittayapaisith stated earlier that commercial banks should not rush to boost their interest rates despite the central bank’s plan to tighten monetary policy.
Governor of the Bank of Thailand (BoT), Sethaput Suthiwartnarueput, believe that gradual moves are adequate to combat inflation without harming economic growth, even though other Asian nations have increased their policy rates by more than 100 basis points this year in response to the Federal Reserve’s tightening. (NNT)