Thai central bank governor says there’s no need to‘undertake heroically large rate hikes’
On Wednesday, the Bank of Thailand raised its key interest rate for the first time since 2018 as inflationary pressures continue to weigh on the economy.
Suthiwartnarueput said the 25-basis-point hike to 0.75% was a “gradual and measured approach,” given the country is in a “very different part of [its] economic cycle” compared with countries that have raised rates more aggressively.
Thailand’s economy remains sluggish, growing only by 2.2% year-on-year in the first quarter, and raising rates higher could further slow down its economy, said Shreya Sodhani, regional economist at Barclays.
Sodhani supported the central bank’s modest hike, saying the country’s economic growth is not “good enough” to warrant a 50-basis-point increase. Still, Barclays expects two more 25-basis-point hikes this year.
While more advanced economies are tightening monetary policy at a faster rate, Thailand’s gradual and measured approach will ensure the country’s economic recovery remains intact, Suthiwartnarueput said.
″[Advanced economies] are looking for a soft landing, but we’re looking at trying to ensure a smooth takeoff,” he added.
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