Reuters poll of economists expects Thailand’s central bank to raise interest rates by 25 basis points at its forthcoming meeting on Wednesday (January 25) in an effort to contain rising inflation, with additional rate hikes probable despite the improvement in the economic outlook brought about by China’s reopening.
The Bank of Thailand (BOT) is widely anticipated to maintain its monetary policy tightening for a longer period of time than its neighbors like Malaysia and Indonesia. Although there has been an easing of pricing pressures in Thailand, inflation in December was still 5.89%, which is significantly beyond the central bank’s 1-3% target.
Twenty-one of the twenty-three analysts polled by Reuters anticipated that the BOT will increase its benchmark one-day repurchase rate by 25 basis points (bps) on January 25.
According to HSBC economist Aris Dacanay, the Thai central bank is likely to continue normalizing rates in a cautious and measured manner because inflation is still high and there will be upcoming demand-side pressures coming from the revival of tourism.
“Because of mainland China reopening borders much earlier and much faster than a lot of people expected…we do expect Thailand to grow faster than trend. This gives the BOT room to continue hiking rates, to continue anchoring inflation expectations,” added Dacanay.