Thailand sees inflation breaching goal on fuel, food; holds rate

[BANGKOK] Thailand's central bank said inflation this year will breach its target on higher oil and food prices, even as it held its policy rate steady to continue to focus on supporting an economy still reeling from the pandemic.

The Bank of Thailand on Wednesday (Mar 30) raised its headline inflation forecast for this year to 4.9 per cent, above the top-range of its 1 per cent-3 per cent range for the year and boosting it from the 1.7 per cent it predicted in December.

As well, the central bank's rate-setting committee decided unanimously on Wednesday to hold its key rate at a record low 0.5 per cent for a 15th straight meeting, as forecast by all 23 economists in a Bloomberg survey.

Thailand, a net energy importer, is facing rising costs as oil prices surged following Russia's invasion of Ukraine. Although inflation already accelerated to the fastest pace in 13 years last month, monetary policymakers have focused on supporting the economic recovery from the pandemic, while signaling fiscal authorities are better placed to ease inflation issues.

Finance Minister Arkhom Termpittayapaisith last week said monetary and fiscal policies must be synchronized to sustain the recovery. The government also announced measures worth 80.2 billion baht ($2.4 billion), mainly to subsidize energy prices. BLOOMBERG