By Kosaku Narioka
Thailand's central bank increased its policy rate as it continued its efforts to tame inflation.
The Bank of Thailand said Wednesday that its policy committee voted unanimously to raise its one-day repurchase rate by 25 basis points to 2.00%, effective immediately.
All eight economists polled by The Wall Street Journal had expected the central bank to lift its policy rate by a quarter percentage point.
Central bankers were likely concerned about upside risks in inflation as companies pass on costs to consumers and the tourism industry continues to recover, economists said. As inflation moderates further, however, this week's rate increase may be the final move in the tightening cycle that began in August, they said.
Thailand's consumer-price index in April rose 2.7% from a year earlier, near the upper end of the central bank's inflation target of 1.0%-3.0% and easing from March's 2.8% increase.
The Bank of Thailand said the economy should continue to expand and inflation should continue to decline at a gradual pace. Headline inflation is projected to be 2.5% in 2023 due to easing electricity and oil prices, it said.
The central bank said the overall financial system remained resilient, although some small and medium-sized enterprises and households remained financially fragile, exposed to rising living costs and higher debt burden.
The country's first-quarter gross domestic product climbed 2.7% from a year earlier, driven by a recovery in tourism and gains in private consumption.
The Thai central bank started raising its policy rate in August from a record low of 0.50% in response to a surge in inflation caused by the Russia-Ukraine war and the recovery from the pandemic.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
05-31-23 0344ET
