Thai rates set to rise, but uncertain recovery clouds timing – central bank


BANGKOK (Reuters) – Thailand’s key interest rate will have to rise, but the timing will depend on the opinion of the monetary policy committee, with the economy growing below potential and the recovery facing uncertainty, the chairman of the central bank’s board said on Wednesday.

The comment was one of the first public remarks by a Bank of Thailand official on monetary policy tightening since the BOT’s Monetary Policy Committee (MPC) left its benchmark rate at a record high of 0.50% in May 2020 after three cuts that year to mitigate against the impact of the pandemic.

“The rate has fallen to 0.50% and the next trend will have to go up…but it depends on when the MPC deems it appropriate,” Porametee Vimolsiri told a company seminar.

The MPC will then review its policy on June 8. Some economists expect a rate hike in the fourth quarter to cool inflation to near a 13-year high.

BOT Governor Sethaput Suthiwartnarueput recently said the bank would not disrupt the recovery.

Porametee said the recovery faced uncertainty with a protracted war between Russia and Ukraine and policy tightening in the United States and other countries to combat rising inflation.

“It’s called the recovery on uncertainty” amid weaker-than-expected growth and higher-than-expected inflation, he said.

The country’s fiscal and financial position remained strong, but room to support the economy was more limited as public debt rose, Porameetee said.

The BOT forecast economic growth of 3.2% and headline inflation of 4.9% this year, which is above its target range of 1% to 3%, and will provide updated estimates after the rate meeting. .

Last week, the state planning agency cut its GDP growth for 2022 to 2.5%-3.5% from 3.5%-4.5% and sharply raised its estimate of the inflation at 4.2%-5.2%.


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