Bank Of Thailand To Raise Interest Rate By 25 Points

Based on a poll, the Bank of Thailand (BOT) is expected to raise its key interest rate by 25 basis points (bps) on Wednesday and then hold it at that level for the rest of this year and next, bringing an end to a modest tightening cycle.

Unlike most Southeast Asian economies, Thailand's inflation has already returned to the central bank's target range of 1% to 3%, and the commerce ministry expects it to fall sharply in May due to a high base in 2022 and lower fuel prices.

However, Governor Sethaput Suthiwartnarueput stated last month that inflation risks remained and needed to be monitored, implying that the central bank's policy decisions will be data-dependent.

17 of 22 economists polled expected the BOT to raise its benchmark one-day repurchase rate by 25 basis points to 2% at its May 31 meeting. The other five predict no change.

If the majority opinion is correct, interest rates will be twice as high as they were prior to the COVID pandemic.

The BOT has raised rates by a total of 125 basis points since August, a much slower pace than many of its global peers, as Thailand's tourism-dependent economy has lagged much of Southeast Asia's recovery.