September 15, 2022
  • September 15, 2022
  • Home
  • Central Banks
  • Bank of Thailand to maintain firm policy as growth outweighs inflation

Bank of Thailand to maintain firm policy as growth outweighs inflation

By on March 28, 2022 0
  • The 22 economists surveyed saw their key rate stable at 0.50% on March 30

BENGALURU, March 28 – Thailand’s central bank will not raise interest rates to a record high for more than a year in a bid to prop up an economy still struggling to recover from the pandemic despite a rise in l inflation, according to a Reuters poll.

As inflation in the tourism-dependent economy hit a 13-year high in February, driven mainly by rising energy prices, policymakers expect price pressures to be temporary .

But Russia’s invasion of Ukraine has triggered a spike in global energy and food prices that will make it harder for the Bank of Thailand (BOT) to contain inflation, as noted by d other central banks who, until recently, argued that high inflation was transitory.

Join now for FREE unlimited access to


Still, the BOT was expected to maintain its accommodative policy to revive growth which has yet to recover to pre-pandemic levels due to a subdued recovery in tourism and tighter mobility restrictions.

All 22 economists in a March 16-25 Reuters poll predicted that the BOT would leave its overnight repurchase rate (THCBIR=ECI) at a record high of 0.50% at its March 30 meeting. The median forecast showed no rate change through the second quarter of 2023.

“Under the hood of an unchanged policy rate, the MPC is likely to deliberate on mounting inflationary pressures amid high commodity prices and supply shocks, amid a fragile economy facing challenging high uncertainties and downside risks related to geopolitics and the pandemic,” said Chua Han Teng, economist at DBS.

The BOT was due to raise rates to 0.75% in the second quarter of next year, making it the last central bank in Southeast Asia to raise interest rates.

However, there was near-division among economists, with six out of 13 expecting no rate change in the second quarter of next year, indicating low conviction about the central bank‘s policy stance. .

Of the remaining seven, four were in line with the median opinion, with two expected to hit 1.00% with one vote predicting 1.25%.

“The current situation makes it increasingly difficult for policymakers to strike a balance between managing risks to economic growth and price stability,” said Somprawin Manprasert, chief economist at Bank of Ayudhya.

Join now for FREE unlimited access to


Reporting by Md. Manzer Hussain; Poll by Tushar Goenka and Devayani Sathyan; Editing by Hari Kishan, Jonathan Cable and Alison Williams

Our standards: The Thomson Reuters Trust Principles.