Thailand raised its key interest rate by one-quarter point for a third straight meeting as an economic recovery aided by tourism revival risks stoking prices.
The Bank of Thailand’s monetary policy committee yesterday voted unanimously to raise the one-day repurchase rate by 25 basis points to 1.25 percent, as seen by 20 of 21 economists in a Bloomberg survey.
One economist predicted the rate would be kept unchanged.
Thailand’s gradual tightening approach, once regarded by some analysts as too little to cool price gains at a 14-year high and a currency hitting a 16-year low, now looks more appropriate as pressure on both fronts eased.
Southeast Asia’s second-largest economy is gaining momentum as foreign tourists return, while GDP growth in the third quarter rose 4.5 percent from a year earlier, the fastest pace in more than a year.
Thailand is likely to buck the global trend of slowing growth next year, powered by a resurgent tourism sector that is helping boost local demand, Bank of Thailand Governor Sethaput Suthiwartnarueput said earlier last month.
The baht posted its biggest one-day gain in more than 15 years last month, bolstered by the possibility of slower US Federal Reserve tightening and easing COVID-19 restrictions in China.
Separately, Indonesia’s central bank stands ready to further raise interest rates and boost short-term bond yields to support the rupiah into next year, Bank Indonesia Governor Perry Warjiyo said.
The rupiah, Asia’s worst performer this quarter, should bounce back next year on the back of Indonesia’s recovery momentum and cooling inflation, Warjiyo said at the central bank’s annual meeting yesterday.
The monetary authority would continue its “triple intervention” strategy and buy up bonds in the secondary market to maintain “competitive” yields, he said.
Indonesia’s currency has weakened to a two-year low even as the central bank tightened by another half-point earlier last month, taking the benchmark rate to levels seen before COVID-19.
Amid global turmoil, the governor doubled down on Bank Indonesia’s “front-loaded, pre-emptive and forward-looking interest rate policy” to anchor “overshooting” inflation expectations, with the goal of wresting the core gauge back to its 2 to 4 percent target earlier in the first half of next year.
Policymakers would also continue using macroprudential measures to support growth. Bank Indonesia is extending looser rules on home and auto loans, as well as lower reserve requirements for banks lending to priority sectors.
It reaffirmed its estimate for GDP to expand 4.5 to 5.3 percent next year, driven by exports, consumption and investment.
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