The Bank of Thailand (BOT) has said delaying rate hikes for too long would not be good for the nation as inflation continues to climb, in remarks that prompted economists to predict an imminent rate hike.
BOT Governor Sethaput Suthiwartnarueput told a business seminar and reporters that inflation is expected to rise beyond the central bank’s 1-3% target range this year, and is seen peaking at 7.5% in the third quarter.
Sethaput noted, however, that any hikes will be gradual as concerns remain about a recovery in the vital tourism sector. He did not say how soon and how much rates would be increased.
He added that policy tightening should not be done too late to avoid sharp increases, while projecting that the return of the Thai economy to pre-pandemic levels would be late this year or in early 2023.
Last week, the central bank left its key rate unchanged at a record low of 0.5%. In a 4-3 vote, however, the three dissenters favored a quarter-point hike, citing increased upside risks to both growth and inflation. read more
The BOT will next review policy in August, when economists expect a rate increase. Last week, the BOT raised its 2022 economic growth forecast to 3.3% from 3.2% and sharply increased its inflation outlook to 6.2% from 4.9% seen earlier.
Sethaput said the economy is not expected to face an economic crisis, just high inflation, adding that external stability was good and capital flows were not yet a concern.
He also said a weak baht at five-year lows against the dollar has not accelerated inflation much, assuring that the BOT would not be complacent and would closely monitor the situation. (NNT)
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