BANGKOK: Thailand’s central bank kept its benchmark interest rate steady in a split decision yesterday, as it flagged mounting inflation risks, and signalled its next move may be an increase.

       The Bank of Thailand’s (BoT) rate-setting committee voted four-to-three to keep the benchmark rate at a record low 0.5%, according to a statement. The decision was forecast by 22 out of 24 economists in a Bloomberg survey.

       “Headline inflation would increase and remain elevated for longer than previously estimated,” the Monetary Policy Committee said in a statement.

       “The committee will assess the appropriate timing for a gradual policy normalisation in accordance with the shift in the outlook and risks surrounding growth and inflation.”

       The hawkish pause brings the BoT a step closer to joining peers the world over who have turned to tightening in the face of surging inflation, fanned partly by supply disruptions due to Russia’s war in Ukraine.

       What probably swung the decision in favour of a hold is the forecast for South-East Asia’s second-largest economy to grow at the slowest pace in the region this year.

       The Thai baht erased its loss after a split central bank decision on interest rates to trade up 0.1% to 34.445 per dollar.

       The benchmark Stock Exchange of Thailand index rose 0.3% after resuming afternoon trade.

       “The four-to-three vote represents an apparently hawkish turn,” said Frances Cheung, a rates strategist at Oversea-Chinese Banking Corp in Singapore.

       “Together with the upward revision in inflation, it paves the way for the start of the rate hiking cycle, likely sooner rather than later.”

       The central bank yesterday raised its inflation forecast for this year to 6.2% from 4.9% predicted in March and expects the economy to grow 3.3%, only a tad faster than its previous forecast for a 3.2% expansion.

       Three members of the rate panel made a case for tightening yesterday, saying inflation risk was clear enough to support a 25 basis-point increase.

       For now, the government has weighed in with steps to check inflation, allowing the central bank room to keep rates lower to support a recovery in consumption demand.

       Government agencies will discuss possible measures to cool inflation, Prime Minister Prayuth Chan-Ocha said Tuesday, after data showed consumer prices rose 7.1% in May from a year earlier, the highest level in nearly 14 years. — Bloomberg