Thailand holds rate to nurture budding recovery, eyes inflation

[BANGKOK] Thailand's central bank held off raising its benchmark interest rate to support a nascent economic recovery threatened by the Omicron variant, and sees rising risks from inflation that has breached its target range.

The Bank of Thailand's rate-setting committee decided unanimously on Wednesday (Feb 9) to hold the key rate at a record-low 0.5 per cent for a 14th straight meeting, as expected by all 24 economists in a Bloomberg survey.

Economies globally are seeking to navigate a recovery path between tenacious virus variants and inflation pressures, while South-east Asia faces a particular risk to capital flows as the US Federal Reserve prepares to raise interest rates.

Indonesia, which decides policy on Thursday, has turned hawkish, while Singapore has tightened policy twice since October.

Prime Minister Prayuth Chan-Ocha's government has resumed quarantine-free visa entry and planned talks on travel bubbles with China and Malaysia to revive its tourism industry. Meanwhile, it's also controlling key food and fuel prices to help minimise inflation's impact on consumers.

Consumer prices accelerated by 3.23 per cent in January, the fastest since last April and above the central bank's 1 per cent-3 per cent policy target range for this year set in December.

The bank expects inflation to accelerate in the first half of the year, driven by energy and food prices, it said in a statement accompanying Wednesday's decision.

Covid-19 cases are rising again due to the highly-contagious Omicron variant. New daily infections have risen above 10,000 since Feb 5, after staying below that level since late October. BLOOMBERG