Thai central bank holds fire again, rates set to remain unchanged


BANGKOK, April 2 (Reuters): Thailand’s central bank left its policy rate unchanged at a historic low on Wednesday despite rising inflation, and lowered its 2022 growth forecast for the battered economy. the pandemic.

The Bank of Thailand (BOT) said it expects inflation to exceed the target this year before returning to its target range of 1-3% next year.

The BOT’s monetary policy committee voted unanimously to keep the one-day repurchase rate at 0.50%, where it has been since May 2020, for a 15th consecutive meeting, as predicted by the 22 economists interviewed by Reuters.

“Thailand’s economic recovery will remain intact in 2022 and 2023, despite the impacts of sanctions against Russia which have led to higher energy and commodity prices and a slowdown in external demand,” he said. in a press release after his political meeting.

Although the sanctions on Russia have increased the cost of goods, they will not derail the path to overall recovery, he said, adding that he would focus on supporting the recovery.

As supply-driven inflation is seen as temporary, policy adjustments should be discussed when the economy grows to its potential, which is expected at least by the end of next year, the MPC secretary said. , Piti Disyatat, during a press conference.

“The policy rate is a blunt instrument, so we have to weigh this well before adjusting it,” he said.

Economists say a policy tightening is unlikely as the recovery remains fragile, with the vital tourism industry still struggling.

Kobsidthi Silpachai, head of capital markets research at Kasikornbank, said he expected the rate to remain unchanged for the rest of the year until “there are clear signs a recovery in demand, in particular a recovery in tourism”.

The BOT lowered its economic growth forecast for 2022 to 3.2% from 3.4% forecast in December, but raised its headline inflation forecast to 4.9% from 1.7% previously. It now expects inflation to slow to 1.7% in 2023.

The central bank lowered its economic growth forecast for 2023 to 4.4% from 4.7%.

Southeast Asia’s second-largest economy grew 1.6% last year, one of the slowest growth rates in the region, following a 6.2% contraction in 2020.

On Monday, Finance Minister Arkhom Termpittayapaisith told Reuters that interest rates should stay low to support the recovery.

The BOT maintained its forecast of foreign tourists at 5.6 million this year, after about 428,000 actual visits in 2021. This compared to 40 million foreign tourists in 2019 before the pandemic, when their expenditure represented 11% of GDP.

The BOT raised its export growth forecast for 2022 to 7.0% from 3.5% previously. He predicted that exports would increase by 1.5% next year, with 19 million foreign tourists. -Reuter


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