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Thailand’s central bank expected to raise policy rate

The Bank of Thailand (BoT) is expected to raise its policy rate by 0.25 percentage points to 1.75% to contain inflation amid the economic recovery while trying to ease baht volatility, according to economists.
Thailand’s central bank expected to raise policy rate ảnh 1The Bank of Thailand (BoT) is expected to raise its policy rate by 0.25 percentage points to 1.75%. (Photo:bangkokpost.com)

Bangkok (VNA) – The Bank of Thailand (BoT) is expected to raise its policyrate by 0.25 percentage points to 1.75% to contain inflation amid the economicrecovery while trying to ease baht volatility, according to economists.

Research centres believed the central bank's move will attempt to controlinflation, facilitating a smoother economic recovery via monetary policynormalisation. However, some research houses expected the central bank mayweigh up managing foreign exchange rates with future rate hikes rather thaninflation rate containment.

Amonthep Chawla,chief economist at CIMB Thai Bank, forecast the rate hike, to be announced atthe Monetary Policy Committee's meeting on March 29, will be the last one forthis rate cycle, making the terminal rate 1.75%.

Moreover,efforts to tackle the Thai baht's volatility against the US dollar will be thekey objective of the increase in this round, rather than containing inflationas the inflation rate has been declining, he said.

The central bank has increased the policy rate four consecutive times, startingfrom August 2022, with an objective to curb higher inflation rates. Thailand'sheadline inflation, gauged by the consumer price index (CPI), was 3.79%year-on-year in February, decelerating for a second straight month and thelowest rate in 13 months. This followed 5.02% headline inflation year-on-yearin January and 5.89% in December 2022.

The central bank assessed medium-term inflation to remain anchored within thetarget range at 1-3%.

Amonthep said the inflation rate is expected to return to the central bank'starget framework around late April, or later in the second quarter.

Meanwhile, the Kasikorn Research Centre (KResearch), Siam Commercial BankEconomic Intelligence Centre and TTB analytics expected the central bank toraise its rate two times, in March and June, making the rate 2% by mid-year.

Thanyalak Vacharachaisurapol, deputy manager of KResearch, said controlling theinflation rate would be the key objective of the central bank's policy rateincrease.

Ensuring pricing stability through both the inflation rate and foreign exchangerate is the key role of the central bank, Thanyalak noted./.

VNA
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