Thai central bank asked to ease impact of any rate hike: finance minister

THAILAND'S finance minister said on Tuesday (Jun 21) he had asked the central bank to minimise the impact of any interest rate hike, ensure enough liquidity in the banking system and maintain a stable baht currency.

His comments came as most economists expect the Bank of Thailand (BOT) to raise the key interest rate at its next meeting on Aug 10 to tame surging inflation.

Finance Minister Arkhom Termpittayapaisith told reporters he had asked the BOT to talk to banks to help mitigate the impact of a hike in the policy rate on borrowers.

"Tackling inflation will be inevitable as every country has also faced the same problem," he said.

The central bank said it would manage inflation while ensuring the economic recovery is not disrupted, Arkhom said.

The BOT forecast South-east Asia's second-largest economy will grow 3.3 per cent in 2022 after last year's 1.5 per cent expansion, which was among the lowest in the region. Headline inflation hit a near 14-year high of 7.1 per cent in May.

With the baht at its weakest level in more than 5 years, Arkhom said the currency was difficult to manage because of external factors, including a fast-rising US dollar.

But he said he had asked the BOT to keep baht moves stable.

Last week, BOT governor Sethaput Suthiwartnarueput said delaying rate hikes would not be good for the economy as inflation climbs.

On Jun 8, the BOT left its key rate at a record low of 0.50 per cent, where it has been since May, 2020. But in a 4-3 vote, the 3 dissenters favoured a quarter-point hike, citing continued recovery and rising inflationary risks. REUTERS

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