Hike rates

Thai c.bank to gradually raise rates to contain inflation

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  • The economy is expected to grow about 3% this year, 4% next year
  • The economy is expected to return to pre-pandemic levels by the first quarter of next year
  • C.bank is expected to raise its key rate again later this month

BANGKOK, Sept 7 (Reuters) – Thailand’s central bank will gradually raise interest rates to curb inflation and ensure a smooth recovery as the economy is expected to return to pre-pandemic levels by the end of the year or early next year, its governor announced on Wednesday.

The recovery of Southeast Asia’s second-largest economy has lagged behind other countries as its vital tourism sector has just started to recover while investment remains sluggish.

The economy is expected to grow by around 3% this year and 4% next year, Bank of Thailand Governor Sethaput Suthiwartnarueput told a business seminar. Last year’s 1.5% growth was among the slowest in the region

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The BOT, among Asia’s least hawkish central banks, last month raised its key rate for the first time in nearly four years, by a quarter point to 0.75%. A further rise is expected at the next meeting on September 28, with inflation hitting a 14-year high of 7.86% in August. read more read more

Monetary policy normalization will be carried out in a gradual and measured manner depending on economic conditions, Sethaput said, adding that a larger move or a pause is possible if needed.

“Our goal is to facilitate take-off…we don’t want financial conditions to tighten too quickly and disrupt the recovery,” he said.

Sethaput reiterated that the BOT was not behind the curve in its policy and, unlike others, raised rates even before the economy returned to pre-pandemic levels.

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Reporting by Orathai Sriring, Kitiphong Thaichareon and Satawasin Staporncharnchai Editing by Kanupriya Kapoor

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