BOT to raise interest rates on Wednesday

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From The Thaiger

Bank of Thailand (BOT) Governor Sethaput Suthiwartnarueput today announced interest rates will be raised on Wednesday to deal with potential inflation increases.

Governor Sethaput is expected to raise interest rates by a modest quarter-point to take the benchmark rate to 1.25% underscoring ongoing worries about growth in Southeast Asia’s second-largest economy.

United Overseas Bank economist Enrico Tanuwidjaja says he expects a relatively more modest recovery of the Thai economy and a less aggressive BOT compared to the rest of the major and regional central banks on the back of easing inflation which may result in a rather persistent weakness in the Thai baht.

“Negative real interest rates will continue to favour the Thai economic recovery as it diverges away from an ultra-tight monetary policy elsewhere in the world, most notably in the US and Europe.”

The US Federal Reserve increased rates by 375 basis points so far in this cycle, with 75 basis point moves at the last four meetings and another 50 due in December.

The baht has been one of the top performers in emerging market currencies, depreciating only about 7% so far this year, despite the wide interest rate gap.

Australia and New Zealand (ANZ) Banking Group Limited economist Krystal Tan noted that the external pressure on the BOT to be more assertive with rate hikes has also eased after the recent retreat in the dollar.the tourism-dependent Thai economy.