THAILAND’S central bank held off raising its benchmark interest rate to support a nascent economic recovery, even as it sees rising risks from inflation that has breached its target range.

The Bank of Thailand’s rate-setting committee decided unanimously Wednesday to hold the key rate at a record-low 0.5% for a 14th straight meeting, as expected by all 24 economists in a Bloomberg survey.

Economies globally are seeking to navigate a recovery path between tenacious virus variants and inflation pressures, while Southeast Asia faces a particular risk to capital flows as the US Federal Reserve prepares to raise interest rates.

Indonesia, which decides policy on Thursday, has turned hawkish, while Singapore has tightened policy twice since October.

The Thai bank “is likely to remain somewhat cautious about the economic outlook in the wake of rising COVID-19 cases. However, its job will have become more complicated” as price pressures build, said Mitul Kotecha, chief emerging markets Asia & Europe strategist at TD Securities in Singapore. “With inflation rising and major central banks becoming more hawkish, pressure to shift policy will grow in the months ahead.”

The baht was up 0.1% to 32.89 per dollar at 2:17 p.m. local time. The benchmark SET Index Stock extended the day’s gains to 1.3%, reaching its highest level since August 2019.

Prime Minister Prayuth Chan-Ocha’s government has resumed quarantine-free visa entry and planned talks on travel bubbles with China and Malaysia to revive its tourism industry. Meanwhile, it’s also controlling key food and fuel prices to help minimize inflation’s impact on consumers.

Consumer prices accelerated by 3.23% in January, the fastest since last April and above the central bank’s 1%-3% policy target range for this year set in December.

“Headline inflation in 2022 would be higher than previously assessed and could exceed the target range in the early part of the year,” the central bank said in its statement, though it said the average for the year would be within the target’s upper bound. Its most recent inflation forecast for 2022, issued in December, was 1.7%.

COVID-19 cases are rising again due to the highly contagious Omicron variant. New daily infections have risen above 10,000 since Feb. 5, after staying below that level since late October.

“The strength of the economy will be a prime consideration for the central bank, which today described the recovery as fragile. Virus cases are rising again, fueled by the spread of the Omicron variant,” said Gareth Leather, senior Asia economist at Capital Economics Ltd. “Whereas some economists are penciling rate hikes for this year, we think interest rates will be left unchanged until the end of 2023.” — Bloomberg