BoT 4th MPC Decision - 3 August 2023

Seventh straight 25 bps hike to a 9-year high, marking the potential end of tightening

The Bank of Thailand (BoT) raised the Overnight Repurchase Rate by another 25 basis points (bps) to 2.25%, a nine-year high, in line with market estimates but against house expectations

  • The Monetary Policy Committee’s (MPC) seven members unanimously voted to raise the policy rate for a seventh straight meeting.
  • The committee stated that raising the policy rate would help to maintain inflation within the target range, given the context of continued economic expansion and reduced slack. The hike would also preserve policy space amidst the uncertain economic outlook, whilst preemptively addressing potential financial imbalances that could arise in a prolonged low interest rate environment.

The BoT expects the Thai economy to continue expanding, driven mainly by tourism and private consumption

  • The BoT retained its GDP growth forecast for 2023 at 3.6% YoY (2022: 2.6%) and for 2024 at 3.8%, to be driven by an expected 29.0m foreign tourist arrivals in 2023 and 35.5m in 2024. That said, the committee acknowledged that external demand has softened, amid subdued demand from China, but expects it to gradually recover going forward. They also highlighted increased risks to the growth outlook given prolonged domestic political uncertainties and an uneven global economic outlook.