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BoT Raises Rate For The First Time Since December 2018

THAILAND
  • Bank of Thailand increased its policy rate by 25bps to 0.75% after keeping rates steady since May 2020 to stimulate the economic activity following the Covid shock.
  • Six policymakers voted for hike rates – out of seven – with one member calling for a 50bps hike.
  • We previously saw that inflationary pressures have been accelerating in Asia/SE Asia (ex-China), ‘forcing’ central banks to start tightening monetary policy after keeping rates unchanged for nearly 2 years.
  • The chart shows that CPI inflation accelerated to 7.6% in July in Thailand, diverging significantly from the BoT 3% upper tolerance band.
  • *BOT: INFLATION TO REMAIN HIGH BEFORE EASING TO TARGET NEXT YEAR (bbg).
  • BoT also added that rate normalization should be gradual, in line with economic activity and inflation.
  • USDTHB has been retracing higher after reaching a local low at 35.30 in the overnight session; the pair is currently trading slightly below its 50DMA at 35.56. Next ST resistance to watch stands at 35.84.

Source: Bloomberg/MNI

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