The Bank of Thailand will focus on driving economic growth and foreign exchange management next year.
The current low rate of inflation allows the central bank to focus more on other factors, said Mathee Supapongse, the deputy governor overseeing monetary stability.
Mr Mathee said there has been more room to use monetary policy to support the government’s policy of stimulating economic growth and managing foreign exchange rates.
He said the central bank’s inflation target for next year is being deliberated by the Finance Ministry before being sent to cabinet for approval.
This year, the central bank set headline inflation targets — which include the price of fresh foods and energy — of 2.5%, plus or minus 1.5%, on average.
He said headline inflation is expected to turn positive in the first half of next year.
Headline inflation in November, the latest results, showed the economy contracted by 0.97%, due mainly to the drop in oil prices.
Mr Mathee said the central bank’s monetary policy also depends on how quickly the economy recovers.
“Our [economic recovery] remains slow and only certain sectors have recovered, therefore the monetary policy is still needed to accommodate [the recovery],” he said.
Apart from banks’ lending rates, there are several other ways to implement policies to support the recovery, including foreign exchange rates, asset prices and medium- and long-term interest rates.