BoT Releases Minutes From August Monetary Policy Meeting

The Bank of Thailand has published the edited minutes from its August monetary policy meeting, when the MPC raised the key policy rate by 25bp, in line with expectations.

• The Bank flagged downside risks to growth in Thailand's trading partner economies, albeit considered it "unlikely that the global economy would face a sharp slowdown." Volatility in the global financial markets was attributed to "the aggressive rate hikes in response to soaring inflation in many countries as well as concerns over recession."
• The Committee expected domestic economy to return to its pre-pandemic level by the year-end, owing to a larger than expected increase in foreign tourist arrivals, recovery in private consumption, and higher than expected exports, both in terms of value and volume.
• Headline inflation was expected to remain elevated through the remainder of the year, "largely unchanged from the previous forecast." It was expected to ease gradually into the target range in 2023 amid subsiding supply-side inflationary pressures. While the inflation outlook was subject to upside risks, the Committee did not see the risk of a wage-price spiral as a major concern.
• The Committee resolved that "gradual rate hikes were consistent with the growth and inflation outlook." It decided that "that gradual reduction of monetary policy accommodation coupled with having targeted measures in place to support vulnerable groups would be appropriate for Thailand’s uneven recovery across sectors."
• The decision to raise the key policy rate by 25bp was taken in a 6-1 vote, with the sole dissenter calling for a 50bp increase, pointing to the need to "build up policy space to prepare for future uncertainty."
• Click here to see the full document.