MPC increased the repurchase rate by 0.25 per cent

BANGKOK, Jan 11 – The Monetary Policy Committee (MPC) of the Bank of Thailand (BoT) is likely to raise the 1-day repurchase rate, the policy interest rate, by 25 basis points to 2.25 per cent when it meets tomorrow for its first meeting of 2011, according to Kasikorn Research Center (KRC).

The leading bank-related think tank said the MPC increased the repurchase rate by 0.25 per cent at each of its last three meetings, totaling 0.75 per cent, in the second half of last year, and is like to continue in the same trend.

Kasikorn believes the MPC will raise the policy interest rate by a quarter percentage point to 2.25 per cent at its first meeting this year to control the risk of inflation risk. KRC is basing its projection on the forecast that the Thai economy will continue growing, albeit at a slower pace.

An RP hike would also make the actual interest rate shrink within a narrower range, which could prevent a possible imbalance in some sectors, KRC said.

According to the think tank, the interest hike would provide a signal to the market that the upward interest trend in Thailand had not yet ended.

It also indicated that the Thai central bank remained optimistic about the economic outlook and loan growth in the banking sector as well as competition in the loan and deposit markets in which deposit and lending rates are likely to edge up in parallel with the policy interest rate.

sKRC It said the upward interest trend would benefit depositors, but would have a negative impact on debtors and potential borrowers. (MCOT online news)