Thailand’s current benchmark interest rate of 2.5% is considered resilient to various circumstances by Bank of Thailand Assistant Governor Piti Disyatat. Dismissing government pressure that monetary policy is overly stringent, Mr. Piti shared in an interview with the Suthichai Live channel that the central bank prioritizes price stability over high inflation.
The government and the central bank have been in disagreement for months regarding interest rates, with Prime Minister Srettha Thavisin advocating for a rate reduction to stimulate the country’s economy, ranked second in Southeast Asia.
In its recent meeting, the Monetary Policy Committee opted to maintain the key interest rate at 2.50%, the highest in over ten years. The committee aims to establish a neutral rate under the current circumstances, highlighting the rate’s resilience across potential scenarios.
Mr. Piti emphasized that monetary policy should not be the primary driver of economic growth. The Bank of Thailand projects a 2.6% economic growth rate for this year, which could potentially reach 3% with the implementation of government stimulus measures.
Regarding inflation, the central bank is focused on ensuring that prices remain anchored within its target range of 1% to 3%, aligned with economic fundamentals. May’s headline consumer inflation returned to this target range for the first time in a year, easing concerns about inflationary pressures on vulnerable groups.
Mr. Piti emphasized the bank’s goal of maintaining stable inflation over the medium term, in line with international practices. The government is exploring revisions to the inflation target as part of its efforts to potentially facilitate a rate cut.
Looking ahead to 2024, the Bank of Thailand projects headline inflation to stand at 0.6%.
