BANGKOK, Thailand – Bank of Thailand (BoT) Governor, Sethaput Suthiwartnarueput, has indicated that the central bank will not rush to reduce interest rates again following last week’s cut. He emphasized that future rate decisions will depend on inflation trends and the state of the economy, despite the government’s call for further reductions and a higher inflation target.
Speaking in Washington on October 22, Sethaput stated, “Given that we’ve just made adjustments, I think the bar for further rate cuts will be quite high.” He highlighted the slowdown in credit growth as one reason behind the BoT’s recent interest rate cut, the first in over four years.
Sethaput added that future policy moves will hinge on inflation, economic growth, and financial stability. His comments suggest that the BoT is cautious about additional rate reductions, even as Prime Minister Paetongtarn Shinawatra’s government pushes for further cuts and a higher inflation target to stimulate the sluggish economy.
Sethaput, who will meet Finance Minister Pichai Chunhavachira later this month to discuss next year’s inflation target, reiterated that the current inflation framework supports economic stability. This, in turn, helps maintain stable inflation expectations and allows the BoT to raise rates moderately, unlike neighboring countries that have implemented steeper rate hikes.
“If you raise the target, inflation expectations will increase, leading to higher living costs and bond yields,” Sethaput warned while attending the annual IMF and World Bank meetings in Washington.
He further clarified that the recent rate cut was merely an “adjustment” and not the start of a sustained cycle of rate reductions.
