Illustrative image (Source: AFP/VNA) Bangkok (VNA) - TheBank of Thailand (BoT) raised its key interest rate to a nine-year high on August2, amid concerns about possible inflation and political instability.
The BoT's Monetary PolicyCommittee voted unanimously to raise the key interest rate by 0.25 percentagepoints to 2.25%.
Although inflation has easedevery month since January and fell below the target of 1-3% set by the central bank in the past two months, policymakers are still working to ensureinflation at low level for a long time.
The BoT said the economyshould continue to expand, driven mainly by the recovery of tourism and privateconsumption, but there are growing risks from weak exports and domesticpolitical uncertainty, as efforts to form a new government drag on.
Headline inflation declined dueto high energy prices, cost-of-living subsidies and a high base last year, but willrebound in the second half of this year, the BoT said in a statement.
Higherfood prices, along with a more severe El Nino phenomenon, may exacerbate cost inthe context of ongoing growth in the economy, it went on.
The central bank noted thatmerchandise exports have contracted in recent months, partly due to subdueddemand from China and the global electronics cycle, but will pick up in thecoming time as global economic activity gathers momentum.
Burin Adulwattana, chiefeconomist at Kasikorn Research Center in Bangkok said that given the growingdownside risks to growth and subdued inflation, this hike willlikely be the last move in this cycle./.
