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WEDNESDAY, February 08, 2023
Thailand likely to hike key interest rate by 25 basis points tomorrow

Thailand likely to hike key interest rate by 25 basis points tomorrow

TUESDAY, January 24, 2023

Kasikorn Research Centre (KResearch) on Tuesday expected the Bank of Thailand’s Monetary Policy Committee (MPC) to raise Thailand’s key policy rate by 25 basis points to 1.50 per cent to fight inflation.

The MPC, at its previous meeting on November 30, had voted unanimously to raise the interest rate by 25 basis points to 1.25% to control inflation.

KResearch said the Thai economy is continually recovering from the impact of the pandemic due to China’s earlier-than-expected reopening of its borders, which would help the tourism industry.

However, the economy is still being pressured by inflation, the centre said, adding, headline inflation in December had increased to 5.89% while core inflation is still at the same level as the previous month at 3.23%.

KResearch believed that after the revision in January, the MPC would hike the interest rate by 25 basis points one more time to 1.75% within the first quarter of the year, and maintain the rate until the year-end to control the inflation in 2023 within the target of 1-3%.

KResearch forecast that the MPC could be pressured to raise the interest rate to higher than the estimated 1.75% target if Thailand’s inflation continues to rise for too long, or the US Federal Reserve decides to use aggressive rate hikes.

The centre also predicted a K-shaped recovery for the overall economy in 2023 with uneven growth distribution among different industries. Tourism and service industries will enjoy significant growth, while those related to export sectors will suffer from the recessive global economy and the strengthening of the baht.