The Bank of Thailand is highly likely to raise its key policy interest rate at its Aug 10 meeting, a senior official said on Friday, as the country’s economic recovery gains more traction and as other central banks tighten monetary policy to contain inflation.
“The direction will be up. It’s a very high chance, but by how much, that is up to the committee,” Don Nakornthab, senior director for financial stability, said on the TAM-EIG YouTube channel
Most economists now expect the Monetary Policy Committee will lift the key rate from a record low of 0.50%, which has been unchanged since May 2020.
Mr Don said the slight weakening of the US dollar after the Federal Reserve’s 75-basis-point rate hike earlier this week should somewhat reduce pressure on central banks around the world.
Despite interest rate differentials, the interest rate decisions of the BoT will not depend mainly on capital movements but rather on the domestic economy, he said.
The central bank’s growth outlook of 3.3% for this year should be raised on higher foreign tourist numbers, he added.
While the Finance Ministry’s recent growth forecast of 3.5% is higher than the central bank’s projection, it’s still considered low, Mr Don said.
The economy expanded only 1.5% last year, among the slowest in the region.