ASEAN KEY DESTINATIONS
Thai growth expected to slow
In an expected move, the central bank's Monetary Policy Committee (MPC) on Wednesday raised its one-day policy rate by a quarter of a percentage point to 1.75 percent, the second rate hike in as many meetings.
The increase came after the National Economic and Social Development Board earlier announced second-quarter growth of 9.1 percent from the same period last year and 10.6 percent overall in the first half from the year before.
But increasing exports, the main driver of growth in the first half, have already begun to moderate in recent months due to base effects and growing uncertainties about the state of the European and US economies.
Finance Minister Korn Chatikavanij said the MPC rate hike was a signal that the overall economy was normalising, even with the negative impact from political instability and Bangkok riots in April and May.
He said despite the rate hike, interest rates overall remain relatively low. And while higher domestic interest rates may result in higher capital inflows, putting further pressure on the baht to appreciate, other countries across the region are also in the process of normalising monetary policy and raising rates to help head off future inflation.
In any case, Mr. Korn said the central bank would have to consider the need and timing of future rate increases if exports and economic growth slowed in the second half.
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