KBank expects central bank to raise policy rate by 25 points
The research arm of Kasikornbank (KBank) predicted that the central bank’s Monetary Policy Committee (MPC) would raise the key policy rate by another 25 basis points to 1.75% during its meeting on Wednesday.
Kasikorn Research Centre said the MPC is expected to raise the policy rate for the last time this year to further tame inflation, which has been on a significant decline.
KResearch said Thailand’s headline inflation in February was 3.79%, the lowest increase in 13 months.
KResearch said the 3.79% rate was still higher than the target. The MPC is expected to make another rate increase so that the central bank would have policy space in case it needs to reduce the rate in the future.
On January 25, the MPC hiked the policy rate by 25 basis points to 1.50%.
After going unchanged for more than two years during the Covid-19 pandemic, the policy rate was raised by 25 basis points to 0.75% in August and to 1% the following month. On November 30, the MPC raised the policy rate by 25 basis points to 1.25% to control inflation.
KResearch said Thailand’s economy is exposed to more external risk factors due to the global economic slowdown and policy rate increases by foreign central banks, such as the US Federal Reserve and the European Central Bank.
The centre said the MPC would have to weigh the external security risks before it decides to halt hikes of its key policy rate in the near future.
