BoT Raises Key Interest Rate By 25bp, In Line With Expectations

Thai assets have been unfazed by the Bank of Thailand's widely expected decision to raise its benchmark interest rate by 25bp. The outcome of the meeting was correctly predicted by all but one analyst in a Bloomberg poll, with the lone dissenter forecasting no change.

• The Committee assessed that domestic economy "will continue to gain traction with continued recovery in tourism and private consumption thanks to the return of Chinese tourists," while "merchandise exports will slow down this year but are expected to improve in 2024 in line with the global economic recovery."
• "Headline inflation is expected to decline, whereas core inflation remains at a high level with increased risks from demand-side inflationary pressures due to the economic recovery."
• "The Committee deems that a continuing gradual policy normalization is an appropriate course for monetary policy consistent with the growth and inflation outlook."
• The decision was unanimous and comes after three consecutive 25bp rate hikes, bringing the policy rate to its highest level since late 2019. Note that the BoT was a relative latecomer to the global tightening campaign, holding off on rate hikes until August and lagging most of its regional peers due to growth concerns.
• Click here to see the full MPC statement.