Thai central bank says gradual rate hikes appropriate for now

THAILAND’S economy will continue to recover this year and in 2023 and gradual interest rate hikes remain appropriate though the policy can be adjusted if the outlook shifts from forecasts, the central bank said on Monday (Oct 17).

Economic growth is projected at 3.3 per cent this year and 3.8 per cent next year, the Bank of Thailand (BOT) said in a statement for an analysts’ meeting.

Last month, the BOT raised its key interest rate for a second straight meeting, by a quarter point to 1.00 per cent, to contain inflation. It will next review policy on Nov 30, when economists expect a further hike.

The BOT said risks to the economy were balanced and monetary policy would ensure an economic recovery without adding to inflationary pressures.

Inflation is expected to gradually fall from the fourth quarter of this year, the BOT said.

A rebound in the vital tourism sector will be key to the recovery of South-east Asia’s second-largest economy, which expanded only 1.5 per cent last year, among the slowest in the region.

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The central bank predicts 9.5 million foreign tourist arrivals this year and 21 million next year. That compared with 428,000 foreign visitors last year and nearly 40 million in pre-pandemic 2019. REUTERS