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Thai rates still low, tightening to be gradual, says central bank official

CNA – Thailand’s policy interest rate remains low and further tightening will be gradual to curb inflation risks as the economy continues to recover, a deputy central bank governor said yesterday.

The Bank of Thailand raised its main interest rate six times since August to two per cent to tame inflation and policymakers have pledged a gradual return to normal levels consistent with long-term economic growth prospects.

However, the rate is still “low and probably the lowest” in Southeast Asia, which will help future investment, the central bank’s Mathee Supapongse told a business seminar.

The central bank has said that a gradual tightening strategy will help to ensure continued recovery in Southeast Asia’s second-largest economy, driven by tourism and private consumption.

It has forecast economic growth of 3.6 per cent this year and 3.8 per cent in 2024. The economy expanded 2.6 per cent last year.

The central bank’s next review of monetary policy is on August 2, with some economists expecting a further interest rate hike while others have forecast a pause owing to falling inflation. While inflation is trending down there is a need to monitor demand-side pressures and increases in costs pass through as tourism gathers strength, Mathee said.

The policies of the winning parties in May’s national election would also add to inflation, he said. Move Forward and Pheu Thai agreed to form a ruling coalition and both parties promised big wage increases among other pledges.

Thailand’s Central Bank Deputy Governor Mathee Supapongse. PHOTO: CNA