Thailand increased its benchmark interest rate by 25 basis points for a fourth straight meeting to ward off inflation as the economy gathers momentum from the rebound in tourism.
(Bloomberg) — Thailand increased its benchmark interest rate by 25 basis points for a fourth straight meeting to ward off inflation as the economy gathers momentum from the rebound in tourism.
The Bank of Thailand’s monetary policy committee voted unanimously to raise the one-day repurchase rate to 1.50% on Wednesday, as seen by 19 of 20 economists in a Bloomberg survey, with one predicting no change.
Thai policymakers, who have lagged peers in the current tightening cycle, sustained their “gradual and measured” rate action amid price gains that remain elevated and may be stoked by the influx of travelers from China’s reopening. While Thailand’s headline inflation is off the peak, the core gauge remains the fastest since 2008.
The baht near a 10-month high is helping damp imported prices but the rally is hurting the competitiveness of exporters. A group of Thai shippers asked the central bank on Tuesday to delay further rate increases and prioritize stabilizing the currency.
Southeast Asia’s second-largest economy welcomed 11.2 million foreign tourists in 2022, the most since the Covid outbreak. The number is expected by the government to more than double this year to 25 million, especially after China’s reopening.
About 28% of Thailand’s 40 million annual visitors before the pandemic were from China. Tourism typically accounts for at least 12% of the economy and a fifth of jobs while private consumption, which also benefits from travelers spending, makes up 50% of GDP.
Weakening exports, which make up more than half of Thailand’s output, are the dark clouds that loom in the horizon. Overseas shipments fell 14.6% in December, a third straight month of contraction.
–With assistance from Tomoko Sato, Cecilia Yap and Ditas Lopez.
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