Bank of Thailand raises key interest rate

Bank of Thailand raises key interest rate

Thailand records current account surplus of $0.8 billion in October

A fresh market in Muang district of Samut Prakan province. (Photo: Somchai Poomlard)
A fresh market in Muang district of Samut Prakan province. (Photo: Somchai Poomlard)

The Bank of Thailand (BoT) raised its key interest rate by 25 basis points for a third straight meeting on Wednesday, as it tries to contain above-target inflation while supporting an economic recovery facing increasing global headwinds.

The BoT's Monetary Policy Committee voted unanimously to raise the one-day repurchase rate to 1.25% at its final review of the year.

"The tourism sector continues to strengthen...Additionally, private consumption is supported by improving economic activities," the statement said, adding that the financial sector remained resilient.

Headline inflation was seen at 6.3% in 2022 and expected to return to within a target range next year. Southeast Asia's second-biggest economy was expected to grow 3.2% this year and 3.7% next year, the central bank said.

Rate hikes will be gradual and measured, the BoT said, but added that their size and timing would be adjusted if needed.

The baht was up 0.4% after the hike. The BoT said the currency remained highly volatile and was being monitored closely.

All but two of the 19 economists surveyed by Reuters had expected a quarter-point hike while the remaining two had predicted no policy change. 

Current account surplus

The central bank said in a statement on Wednesday that Thailand recorded a current account surplus of US$0.8 billion in October after a surplus of $0.6 billion the previous month.

Exports, a key driver of growth, fell 3.6% year-on-year in October, with imports up 5.4% year-on-year. The trade surplus stood at $1.7 billion, the BoT said.

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