BoT: Rate rises will be gradual
published : 13 Jun 2022 at 10:23
updated: 13 Jun 2022 at 13:51
The central bank governor said on Monday that delaying an interest rate hike too long would not be good as inflation continues to rise.
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, the govenor told the Building A Future Together forum organised by Thai Publica.
But any hikes will be gradual as concerns remain about a recovery in the vital tourism sector, he said. Sethaput did not say how soon and how much rates would be increased.
Policy tightening should not be done too late to avoid sharp increases, he added.
"It's not hitting the brakes on the economy," he told the seminar, adding there was less need for very accommodative monetary policy as the economy clearly recovered.
The return of Southeast Asia's second-largest economy to its pre-pandemic level, however, would be late this year or in early 2023, lagging other countries, he said.
Last week, the Monetary Policy Committee left its key rate unchanged at a record low of 0.5%. But in a 4-3 vote, the three dissenters favoured a quarter-point hike, citing increased upside risks to both growth and inflation.
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.
The economy is not expected to face an economic crisis, just high inflation, Sethaput said, adding external stability was good and capital flows were not a worry yet.
A weak baht at five-year lows against the dollar has not accelerated inflation much, he said, adding the BoT would not be complacent and would closely monitor.