BOT hikes key rate by 25 basis points, forecasts 2.8% GDP growth
The Monetary Policy Committee (MPC) of the Bank of Thailand (BOT) on Wednesday raised the key policy rate by 25 basis points, from 2.25% to 2.5%.
Piti Disyatat, secretary of the MPC, said the committee voted unanimously to raise the key rate with immediate effect.
The previous rate hike by 25 basis points, from 2% to 2.25%, was announced by the MPC on August 2.
Piti said the MPC on Wednesday also forecast that Thailand’s gross domestic product (GDP) would grow by 2.8% in 2023 and by 4.4% in 2024, with private consumption acting as a major contributor.
“Thailand’s economy this year and in 2024 would continue to recover, albeit at a slower rate this year due to [lower] foreign demand,” said Piti.
“In 2024, however, the expansion rate would accelerate due to increase in both domestic and foreign demand, which would also increase inflation.”
The MPC predicted headline inflation in 2023 at 1.6% and at 2.6% in 2024. The lower inflation rate this year is a result of government measures aimed at reducing the people’s cost of living, added Piti.
Core inflation is estimated at 1.4% in 2023 and 2% in 2024.
The MPC reckoned that next year there could be a risk of rising core inflation due to increased demand as a result of government policies, and a rise in food prices if the impact of the El Nino phenomenon is more severe than expected.
The MPC also acknowledged on Wednesday that the country’s overall financial system was stable, while commercial banks have reported a robust level of funds and reserves.
The committee, however, advised banks to monitor the quality of credit that could be affected by the debt repayment ability of small and medium enterprises and vulnerable households.
The MPC urged commercial banks to continue providing debt restructuring programmes to customers and employing a responsible lending policy.