BANGKOK – Thailand’s central bank is highly likely to raise its key policy rate at its August meeting, an official said on Friday, as its economic recovery gains more traction and as other central banks tighten monetary policy to contain inflation.
“The direction will be up. It’s a very high chance, but by how much, that is up to the committee,” Don Nakornthab, a senior director at the Bank of Thailand (BOT), said on the TAM-EIG YouTube channel.
The BOT’s next scheduled policy meeting is on Aug. 10, when economists expect a hike in the key rate from a record low of 0.50%, which has been left unchanged since May 2020.
The official said the slight weakening of the U.S. dollar after the Federal Reserve’s rate hike earlier this week should somewhat reduce pressure on central banks around the world.
Despite interest rate differentials, the BOT’s interest rate decisions will not mainly depend on capital movements but rather on the domestic economy, Don said.
The central bank’s growth outlook of 3.3% for this year should be raised on higher foreign tourist numbers, he added.
While the finance ministry’s recent growth forecast of 3.5% is higher than the BOT’s projection, it’s still considered low, Don said.
Southeast Asia’s second-largest economy expanded only 1.5% last year, among the slowest in the region.
(Reporting by Chayut Setboonsarng, Orathai Sriring and Satawasin Staporncharnchai; Writing by Kay Johnson; Editing by Kanupriya Kapoor)