Another Thai interest rate hike predicted for next year
by Phuwit Limviphuwat and Wichit Chaitrong
We’ve just had one .25 basis point interest rise to the base rate. Now there’s already talk of another in 2019 which will start to affect consumer spending, especially mortgage holders.
Siam Commercial Bank (SCB) and Phatra Securities are predicting that the Bank of Thailand (BOT) is likely to implement a modest interest rate hike again next year.
For the first time in seven years, the BOT lifted the interest rate by 0.25 percent on Wednesday, from 1.5 to 1.75 percent.
“If economic growth remains strong in 2019 and inflation levels are maintained, I believe the BOT will increase interest rates once more in 2019,” BOT senior director Don Nakornthab said.
The central bank has predicted that Thailand’s GDP will grow by 4 per cent in 2019 with 1 per cent inflation.
Don said one of the key risks in raising the interest rate again in 2019 is its likely impact on inflation. However, he added, general economic growth takes precedence over inflation, and if the former remains strong, the BOT is likely to hike the rate next year, though it is unlikely to do so more than once.
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