Thailand central bank surprises by raising key rate to 2.5%

  • Thailand’s central bank on Wednesday brought its policy rate to 2.5%, an eighth-consecutive increase that came in defiance of market expectations and in a bid to keep inflation in check.
  • Thailand’s headline consumer price index in August rose 0.88% from a year earlier, remaining below the central bank’s target range of 1% to 3% for four consecutive months.
  • “The Committee deems the current policy interest rate to be appropriate for supporting long-term sustainable growth,” the BOT said in a statement, signaling a neutral stance. “Going forward, the Committee will take into account growth and inflation outlook, including upside risks from government economic policies.”
  • With the government set to unleash a string of stimulus steps to spur economic growth, Wednesday’s decision marked a preemptive action by monetary policymakers to check inflationary pressures. Another signal to the end of BOT’s tightening cycle came from the lack of reference to future hikes, unlike in the Aug. 2 statement when the authority said it will consider “further increases.”

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