Thai Central Bank Expects to Continue Raising Rates despite Inflation Falling Below Target

Thailand’s central bank expects to see 2.9% economic growth in the first six months and 4.2% in the second half of the year, while believing that the economic recovery of the second largest economy in Southeast Asia is intact.

Bank of Thailand Governor Sethaput Suthiwartnarueput said that the central bank will continue to gradually normalize interest rates to boost economic growth while keeping inflation in check.

The governor expects to see a recovery in the tourism sector with an estimation of tourist arrivals in the kingdom to reach 29 million this year. However, exports, which is also Thailand’s another key driver of growth, is expected to come out flat this year despite some recovery in the second half.

Despite inflation falling way lower than the central bank’s target of 1-3% in June to its slowest pace in 22 months of 0.23%, the central bank is expected to raise rates further in the next meeting on August 2. Core rate was at 1.32% in June.