BANGKOK (Reuters) – Thailand’s central bank unexpectedly raised its key interest rate for an eighth straight meeting on Wednesday, 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 2.50%. 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% from 3.6% projected earlier, and raised its 2024 growth outlook to 4.4% from 3.8%. Last year’s growth was 2.6%.
Southeast Asia’s second-largest economy grew just 1.8% 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.
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% of GDP.
Headline inflation was seen at 1.6% this year, compared with 2.5% projected earlier, the central bank said, while raising its 2024 forecast to 2.6% from 2.4% seen earlier.
(Reporting by Orathai Sriring, Kitiphong Thaichareon, Satawasin Staporncharnchai and Chayut Setboonsarng; Editing by Martin Petty)
