Thailand’s central bank unexpectedly raised its key interest rate for an eighth straight meeting on Wednesday (Sep 27), despite slowing economic growth, below-target inflation and rising global uncertainties.

The Bank of Thailand’s (BOT) monetary policy committee voted to hike the one-day repurchase rate by 25 basis points to 2.5 per cent. The rate has now been raised by 200 basis points since August 2022.

Only six of the 27 economists polled by Reuters had predicted a quarter-point hike while the remaining 21 had forecast no policy change.

The central bank cut its 2023 economic growth forecast to 2.8 per cent from 3.6 per cent projected earlier, and raised its 2024 growth outlook to 4.4 per cent from 3.8 per cent. Last year’s growth was 2.6 per cent.

South-east Asia’s second-largest economy grew just 1.8 per cent year on year in the April-June quarter, much slower than expected and less than the previous quarter, as shrinking exports and lower investments undercut strength in tourism.

Thailand’s new government, which took office last month, has approved a raft of new policies, including waiving visa requirements for visitors from China, in a bid to stimulate the economy.

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The central bank on Wednesday expected foreign arrivals of 28.5 million this year and 35 million next year, versus a previous forecast of 29 million and 35.5 million, respectively. Pre-pandemic 2019 saw a record of nearly 40 million foreign tourists, whose spending accounted for more than 11 per cent of gross domestic product.

Headline inflation was seen at 1.6 per cent this year, compared with 2.5 per cent projected earlier, the central bank said, while raising its 2024 forecast to 2.6 per cent from 2.4 per cent seen earlier. REUTERS