The Bank of Thailand’s monetary policy committee unanimously voted to raise the policy rate by 25 basis points, to 2.5%, with immediate effect today (Wednesday).

According to Piti Disyatat, secretary of the committee, the Thai economy overall continues to recover this year, although at a slow pace due to soft external demand, but growth should pick up next year, supported by both domestic and global demand.

Inflation is projected to increase next year in line with the recovery and El Niño -related supply pressure.

The committee projects growth to be 1.8% and 4.4% in 2023 and 2024 respectively, driven by private consumption. Growth this year weakened somewhat due to a delayed recovery in merchandise exports and tourism, weighed down by subdued growth in China and the global electronic cycle. Growth should, however, pick up next year thanks to increasing domestic demand, underpinned by tourism recovery and export increases.

Headline inflation is projected to remain within the target range at 1.6% and 2.6% this year and next.  The overall financial system remains resilient. Financial institutions maintain high levels of capital and loan loss provision.

Overall financial conditions tightened somewhat, but remain supportive of fund mobilisation by the private sector and the ongoing economic recovery, according to Piti.