Thai Central Bank Expects Continuous Economic Expansion with Upside Risks

The Bank of Thailand expected the economic expansion in the kingdom to continue but with some upside risks as it recently raised the key interest rate in the last meeting by a quarter point, bringing the benchmark up to 2.00%.

Minutes of the meeting on Wednesday noted that the continuation of gradual and measured policy rate normalization to remain appropriate, while the real policy interest rate should at least be in positive territory.

The central bank expected Thai June inflation to be low, but noted that the policy rate is not at a neutral level yet. This came after the report of Thai inflation for May rose 0.53% on year, largely below forecasts for 1.70% by Reuters poll. The figure was the lowest in 21 months due to falling energy and food prices and a high base in 2022. Headline inflation rose 2.67% in April.

The central bank also touched on the controversial issues on wage hike, stating that an increase in minimum wage could prompt higher pass-through of labour costs.