Thailand’s central bank raised its key interest rate by 25 basis points as inflation remains high even as the return of Chinese tourists should help the country’s economic growth.
All members of the Bank of Thailand Monetary Policy Committee (BOT) voted to raise the one-day repurchase rate to 1.50% on their own.
The Central Bank expects Thailand’s economy to grow and inflation to come down.
According to the bank, further rate hikes will be gradual but could be adjusted as necessary.
Thailand’s exports may slow this year, but will increase in 2024 along with the global recovery.
The central bank has raised its base rate by a total of 100 basis points since August.
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However, when compared to other Asian countries, the process of raising rates was less harsh as Thailand’s economic recovery lagged behind its neighbors. The tourism sector began to recover only at the end of last year.
Average headline inflation reached 6.08% in 2022, well above the BOT target range of 1% to 3%.
BOT expects the tourism sector to recover with 25.5 million foreign arrivals this year and 34 million next year, helped by the opening of China.
After the rate hike was announced, the baht remained virtually unchanged at 32.77 per dollar. Since the beginning of this year, it has risen by 5.3%, becoming the best-performing currency in Asia, due to the weak dollar and the opening of China.
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