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Hua Hin
Thursday, May 23, 2024

BOT is expected to raise interest rates as tourism grows

The Bank of Thailand (BOT) is set to raise interest rates by 25 basis points on Wednesday (25 January) to combat high inflation, with more increases probable even as China’s reopening improves the economic outlook.

While pricing pressures in Southeast Asia’s second-largest economy have cooled, inflation in December was still 5.89%, considerably over the central bank’s 1-3% objective.

On January 25, 21 of 23 analysts surveyed by Reuters anticipate the BOT to boost its benchmark one-day repurchase rate by 25 basis points (bps) to 1.50%. The remaining two predict no change.

Thailand, one of Asia’s most famous tourist destinations, is anticipated to welcome at least 5 million Chinese tourists and a total of 25 million international visitors this year, offering a much-needed lift to an economy severely damaged by the worldwide epidemic.

According to the poll, Thailand’s GDP would grow by 3.7-3.8% this year and next, in line with official estimates.

Almost 70% of respondents, or 15 of 22, anticipate another 25 basis point raise to 1.75% by the end of March. Six expected 1.5% rates by then, while one predicted 1.25%.

According to the survey, the central bank would subsequently hike borrowing costs by another 25 basis points, bringing them to 2% by the end of September.

According to poll results, inflation will average 2.8% this year before falling to 1.9% in 2024.

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