Thai central bank raises interest rate, outlook unchanged

BANGKOK Thailand's central bank raised its key interest rate modestly for a second straight meeting on Wednesday to tame 14 year high inflation and ensure a continued economic recovery while maintaining its 2022 growth projection of 3.3 per cent.

The recovery of Southeast Asia's second-largest economy has lagged that of other countries as its vital tourism sector has just started to rebound while investment remains sluggish, allowing the central bank to go slowly on rate hikes despite larger increases by many peers.

The Bank of Thailand's BOT monetary policy committee voted to increase the one-day repurchase rate to 1.00 per cent.

Of 25 economists surveyed by Reuters, 22 had predicted a quarter-point hike and three predicted a half-point increase.

The BOT, among Asia's less hawkish central banks, said the Thai economic recovery has gained traction, mainly due to tourism and private consumption.

The growth and inflation outlook is the same as per the previous assessment. The central bank maintained its 2022 economic growth outlook of 3.3 per cent in June. It reduced its growth forecast to 3.8 per cent from 4.2 per cent for 2023 in the year 2023.

The BOT raised its headline inflation forecast to 6.3 per cent from 6.2 per cent earlier in the day, and its 2023 estimate to 2.6 per cent from 2.5 per cent.

Governor Sethaput Suthiwartnarueput said that the BOT's goal was to make a smooth recovery for the economy, which he expects to return to pre-pandemic levels by late this year or early next year.