The Bank of Thailand (BoT) said on Wednesday it is not closing the door to easing monetary policy, as the economy faces downside risks and it is worried about strength of the baht.
The BoT's monetary policy committee (MPC) last week held the policy rate steady for a fourth meeting since a December hike, but cut its 2019 economic growth forecast to 3.3% from 3.8%. Last year's growth was 4.1%
"The MPC may be disappointed with the downgrade but it thinks growth of 3.3% is not bad. So there is no need to cut rates now," Don Nakornthab, a central bank senior director, told a seminar.
"But it does not close the door to policy easing going forward as there are downside risks to the economy," he said.
This year, some Asian central banks that raised interest rates in 2018 have cut them in a bid to boost sagging growth.
Thai annual growth in January-March was 2.8%, the weakest pace in more than 4 years.
The central bank expects less than 3% growth in the second quarter and the first half of this year, Don said.
The growth pace should pick up to around 4% in the second half on an expected rise in exports and tourism compared with last year's relatively low comparative base, he said.
Exports, a key driver of Thai growth, have contracted so far this year and the central bank sees zero growth for 2019.
The export slowdown has started to impact related jobs and businesses, Mr Don said.
The central bank is worried about the strengthening of the baht, which has gained about 6.6% against the dollar, making it the best performing currency in Asia this year.
The baht gains have been driven by foreign fund inflows, of which the central bank said it was closely monitoring.