Key interest rate raised by Central Bank of Thailand

In order to combat the inflationary pressures in the Thailand economy, the central bank of the country raised its key interest rate by 25 basis points to 3.75% this Wednesday. The move was in line with market expectations.

The Bank of Thailand released a statement saying, “Given the elevated level of inflation and inflation expectations, as well as uncertainty of oil prices in the periods ahead, the MPC [monetary policy committee] assessed that the risks to inflation remained an important issue of concern.”

July’s consumer price inflation surged to 9.2% year-on-year, up from 8.9% year-on-year. Wednesday’s rate hike was the “second straight monthly hike after maintaining the rate steady since August 2007,” said analysts at Action Economics. “While balancing risks of higher inflation against slower growth, it [the central bank] saw the need to tighten in order to contain inflation expectations,” they added. In Bangkok, the SET stock index closed up 1.1%.