Thailand's central bank raised its benchmark interest rate by 25 basis points to 2.50 percent on Wednesday, its fifth increase in six meetings, and signalled more tightening ahead as Asia confronts mounting price pressures.
The rise in borrowing costs by one of Asia's most hawkish central banks follows China's increase in interest rates last month for the second time in just over six weeks, illustrating a multi-front fight against inflation in Asia - from oil-price shocks to food inflation and strong consumer spending.
Fourteen out of 16 analysts surveyed by Reuters expected the Bank of Korea to raise its base rate by 25 basis points to 3.00 percent on Thursday, after it surprised markets by leaving rates unchanged in February. Bank Indonesia kept interest rates unchanged last week but assured financial markets it would steadily, if gradually, tighten policy. Malaysia, the first Asian central bank to lift borrowing costs in 2010, reviews rates on Friday.
Thailand, Southeast Asia's second-largest economy, has Asia's lowest interest rates after Taiwan. Most economists had expected the Bank of Thailand to raise its benchmark rate by 25 basis points. The Bank of Thailand raised its forecast for headline inflation for this year to between 3 and 5 percent, up from a range of 2.5 to 4.5 percent. It said its rate-setting Monetary Policy Committee would "closely monitor inflationary pressure going forward and stands ready to take necessary action."