BOT likely to raise interest rates by 0.25% today
The Bank of Thailand’s Monetary Policy Committee is expected to raise the policy interest rate for possibly the final time in this upward interest rate cycle to 2.00%, up by 0.25%, at a meeting this afternoon, according to a report from the Thai Economic Research Centre.
At the previous MPC meeting, the committee hinted that it may continue to gradually raise interest rates amidst high inflation risks from ongoing domestic recovery efforts, coupled with uncertainties regarding the shifting of costs from producers to consumers, as well as future trends in energy prices and various consumer goods. The MPC is thus expected to proceed with the interest rate hike.
However, the significant deceleration of inflationary pressures, along with the heightened risks faced by the Thai economy due to the global economic slowdown and political uncertainties, will be crucial factors for the BOT to consider. While central banks worldwide have started to ease their tight monetary policies, with major central banks like the US Federal Reserve signalling a possible halt to interest rate hikes in the near future, the MPC will have to weigh these risks and the likelihood of ceasing interest rate increases in the near term, most bank's research centres said.
Kasikorn Research Centre expects the MPC to maintain the interest rate at 2.00% throughout this year if the Thai economy continues to recover as projected.
However, the Thai baht exchange rate is still expected to face volatility in light of uncertainties regarding the formation of the government, which could exert downward pressure on the baht.