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

  • Thailand’s policy interest rate will have to rise but the timing will hinge on the monetary policy committee’s view with the economy growing below its potential and the recovery facing uncertainty, the central bank board chairman said on 25 May 22.
  • The comment was one of the first public remarks by a Bank of Thailand official on tightening monetary policy since the BOT’s monetary policy committee (MPC) left its key rate at a record low of 0.50% in May 20 after three cuts in 2020 to mitigate against the impact of the pandemic.
  • “The rate has dropped 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 business seminar.
  • The MPC will next review policy on 8 Jun 22. Some economists expect a rate hike in 4Q22 to cool inflation, hovering near a 13-year high.
  • BOT Governor Sethaput Suthiwartnarueput recently said the bank would ensure no disruptions to the recovery.
  • Porametee said the recovery faced uncertainty with a prolonged Russia-Ukraine war and policy tightening in the United States and other countries to tackle rising inflation.
  • “It’s called recovery on uncertainty” amid lower-than-expected growth and higher than expected inflation, he said.
  • The country’s fiscal and financial position remained strong, but there was more limited room to support the economy as public debt rose, Porameetee said.
  • The BOT has forecast economic growth of 3.2%, and headline inflation of 4.9% in 2022, which is above its target range of 1% – 3%, and will give updated estimates after the rate meeting.
  • Last week, the state planning agency cut its 2022 GDP growth to 2.5% – 3.5% from 3.5% – 4.5% and sharply raised its inflation estimate to 4.2% -5.2%.

External Link : https://www.channelnewsasia.com/business/thai-rates-set-rise-uncertain-recovery-clouds-timing-central-bank-2705736

25-May-2022