As other central banks tighten their monetary policy, the Bank of Thailand (BOT) says it is highly likely to raise its key policy rate at its August meeting.
According to BOT Senior Director Don Nakornthab, the baht’s weakness remains consistent with that of trade partners and competitors, with the central bank ready to intervene if the Thai currency falls too far.
According to the senior director, if the baht falls to 37 to the dollar while remaining competitive with regional peers, the monetary policy committee (MPC) may disregard this as a factor in their decision because they typically monitor currency competitiveness.
He went on to say that the MPC would take its time deciding how much the rate should be raised because Thailand’s economic recovery has lagged behind that of other countries.
“Chances are quite high for a rate hike in August,” Don said, “but the committee will have to consider how much.”
BOT Governor Sethaput Suthiwartnarueput stated on Monday (11 July) that Thailand would only gradually raise its key rate to combat inflation and ensure an uninterrupted economic recovery.
Despite other central banks’ out-of-cycle policy tightening, the BOT said earlier on Thursday (14 July) that it saw no need to call an emergency meeting to review policy before the next scheduled meeting on August 10, when economists expect a rate hike from a record low of 0.50 percent.
On Thursday, Singapore and the Philippines both announced out-of-cycle rate hikes to combat rising inflation.
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