BoT Raises Key Rate By 25bp

The Bank of Thailand's MPC unanimously decided to raise its benchmark interest rate by 25bp to 1.75% in line with consensus (19 out of 22 economists polled by Bloomberg) and said it stands ready to adjust the size and timing of policy normalization should the evolving growth and inflation outlook differ from the current assessment.

• The move represents the BoT's fifth interest-rate hike this cycle, with the cumulative amount of tightening reaching 125bp. Thailand's central bank lagged most of its regional peers in raising rates but a rebound in economic activity opened up space for hikes as the focus turned to containing inflation.
• The Committee said that "headline inflation would likely return to the target range by mid-2023, and is projected to decline to 2.9 and 2.4 percent in 2023 and 2024, respectively" amid easing supply-side pressures. However, "persistently high inflation remains a risk, as producers could pass on higher costs absorbed in the past and demand-side pressures could pick up as the recovery gains traction."
• In line with its monetary policy framework, "the Committee decided to increase the policy interest rate to normalize the monetary policy stance in a gradual and measured manner toward a level consistent with long-term sustainable growth."
• Click here to see the full statement.