Thai central bank sees current interest rate ‘robust to many scenarios’
The bank aims to ensure that inflation is well-anchored and states that inflation is not causing problems for households and firms
THAILAND’S current benchmark interest rate of 2.5 per cent is “quite robust to many scenarios”, an assistant central bank governor said on Monday (Jun 24), shrugging off government pressure that monetary policy is too tight.
Piti Disyatat also said in an interview with Suthichai Live channel that the central bank did not want a high inflation rate, but a rate that is anchored.
The government has been at loggerheads with the central bank for months over interest rates, with Prime Minister Srettha Thavisin calling for a rate cut to revive South-east Asia’s second-largest economy.
Earlier this month, the Bank of Thailand’s (BOT) committee held its key interest rate steady at 2.5 per cent, the highest in more than a decade. The next rate review is on Aug 21.
“The committee is trying to set a neutral rate at this point,” said Piti, who described the current rate as “quite robust to many scenarios”.
Monetary policy can’t be the engine of growth, he added.
A NEWSLETTER FOR YOU
Friday, 8.30 am
Asean Business
Business insights centering on South-east Asia's fast-growing economies.
The BOT forecast economic growth of 2.6 per cent this year, but Piti said it could reach 3 per cent if a government handout scheme is implemented. Last year’s growth was 1.9 per cent.
The central bank has previously said it was not worried about inflation and its target range was still in line with economic fundamentals.
Headline consumer inflation in May returned to the BOT’s target range of 1 to 3 per cent for the first time in a year.
SEE ALSO
“We don’t want prices to go higher. Because we know that it especially hits the poor people more than the middle income people,” said Piti, adding that the central bank was trying to ensure inflation is “well anchored”.
“What we aim for is the underlying momentum of inflation over the medium term. So our target of 1 to 3 per cent is definitely a medium-term target and this is the same as other central banks in the world,” he said.
The government is seeking to review the inflation target – arguing a change should raise the chance of a rate cut.
“I think... overall in terms of the inflation performance, the main thing is inflation is not causing problems for the households and firms in the way they conduct businesses,” said Piti.
The BOT forecast headline inflation at 0.6 per cent in 2024. REUTERS
Share with us your feedback on BT's products and services
