Thailand delivers third modest rate increase as economy recovers

THAILAND raised its key interest rate by a quarter point for a third straight meeting, as economic recovery aided by tourism revival risks stoking prices.

The Bank of Thailand’s monetary policy committee voted unanimously to raise the one-day repurchase rate by 25 basis points to 1.25 per cent on Wednesday (Nov 30). This had been expected by 20 of 21 economists in a Bloomberg survey; the remaining economist predicted the rate would remain unchanged.

Thailand’s gradual tightening approach was once regarded by some analysts as too little to cool its 14-year high price gains and 16-year low currency.

The strategy now looks more appropriate as pressure on both fronts has eased. Thailand’s economy is gaining momentum as more foreign tourists return. Gross domestic product growth in the third quarter quickened to 4.5 per cent from a year ago, the fastest pace in more than a year.

The central bank’s governor Sethaput Suthiwartnarueput said that Thailand’s economy will likely buck the global trend of slowing growth next year, powered by a resurgent tourism sector that is helping to boost local demand.

The baht posted its biggest one-day gain in more than 15 years this month, bolstered by the possibility of a slower Federal Reserve tightening as well as easing pandemic restrictions in China. BLOOMBERG