The Bank of Thailand has raised its key interest rate to 2.25% in an effort to keep inflation low. Despite falling below the central bank’s target, policymakers are concerned about rising prices. The central bank expects the economy to continue growing, driven by tourism and private consumption. However, they warn of risks from weak exports and political uncertainty. They predict a rebound in inflation in the second half of the year and believe this rate hike will be the last for now. The extended wait for a new government is causing concern among industry groups and could delay investments and trade agreements. There is also concern that a severe El Nino episode could lead to supply shortages and increase the cost of food, driving up inflation.
