Interest rate raised for first time since 2011

Interest rate raised for first time since 2011

The Bank of Thailand increases the repurchase rate from 1.50% to 1.75% in a meeting of the Monetary Policy Committee on Wednesday. (Bangkok Post photo)
The Bank of Thailand increases the repurchase rate from 1.50% to 1.75% in a meeting of the Monetary Policy Committee on Wednesday. (Bangkok Post photo)

The Bank of Thailand, in a widely expected move, raised its policy rate for the first time in more than seven years, aiming at building up policy space amid growing economic and political uncertainty.

The Monetary Policy Committee (MPC) voted 5-2 on Wednesday to lift its one-day repurchase rate by a quarter-point to 1.75% after keeping the rate unchanged since April 2015, said MPC secretary Titanun Mallikamas.

"The majority of the committee's members agree to raise the policy rate to reduce the risk of financial instability and build up policy space for the future," it said in a statement.   

The rise in the base interest rate, technically known as the 1-day bilateral repurchase rate, was the first since 2011. In August of that year, the rate was raised to 3.5%. Three months later, a series of rate cuts began, until the policy rate reached a low of 1.5% in April 2015 - the level it has stayed until now.  

Given that rate-setters have repeatedly discussed raising interest rates in recent meetings, and the vote to keep the rate unchanged was split at 4-3 in November’s meeting, the market had anticipated that the central bank would change course at this year’s final meeting.

After this month's increase, economists expect one more hike in the first half of 2019.


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