Bank of Thailand asked to ease impact of any rate hike: Arkhom

Bank of Thailand asked to ease impact of any rate hike: Arkhom

FILE PHOTO: Finance Minister Arkhom Termpittayapaisith speaks during an interview with Reuters in Bangkok in March. (Reuters)
FILE PHOTO: Finance Minister Arkhom Termpittayapaisith speaks during an interview with Reuters in Bangkok in March. (Reuters)

The finance minister said on Tuesday he had asked the central bank to minimise the impact of any interest rate hike, ensure enough liquidity in the banking system and maintain a stable baht currency.

His comments came as most economists expect the Bank of Thailand (BoT) to raise the key interest rate at its next meeting on Aug 10 to tame surging inflation.

Finance Minister Arkhom Termpittayapaisith told reporters he had asked the BoT to talk to banks to help mitigate the impact of a hike in the policy rate on borrowers.

"Tackling inflation will be inevitable as every country has also faced the same problem," he said.

The central bank said it would manage inflation while ensuring the economic recovery is not disrupted, Mr Arkhom said.

The BoT forecast Southeast Asia's second-largest economy will grow 3.3% in 2022 after last year's 1.5% expansion, which was among the lowest in the region. Headline inflation hit a near 14-year high of 7.1% in May.

With the baht at its weakest level in more than five years, Mr Arkhom said the currency was difficult to manage because of external factors, including a fast-rising US dollar.

But he said he had asked the BoT to keep baht moves stable.

Last week, BoT Governor Sethaput Suthiwartnarueput said delaying rate hikes would not be good for the economy as inflation climbs.

On June 8, the BoT left its key rate at a record low of 0.50%, where it has been since May, 2020. But in a 4-3 vote, the three dissenters favoured a quarter-point hike, citing continued recovery and rising inflationary risks. 

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