The Monetary Policy Committee (MPC) held interest rates steady this month but discussed the timing of the first tightening in years amid concerns about the risks of keeping policy too easy for too long, minutes of the central bank meeting showed on Wednesday.
On Aug 8, the committee voted 6-1 to leave the Bank of Thailand's one-day repurchase rate at 1.5%t, where it has been since April 2015. One member voted for a quarter-point hike.
The MPC will next review policy on Sept 19, when some analysts expect the first interest rate hike since 2011.
The committee believed current monetary policy settings have helped support economic growth and allowed the headline inflation trends to be consistent with the inflation target, the minutes said.
But it acknowledged that macroprudential measures alone would not be sufficient in preventing potential risks in the financial system. Household debt in Thailand has already been
running high for years.
"Thus, monetary policy must be conducted with caution as to not contribute to further buildup of financial vulnerabilities", the minutes said.
"Should economic expansion continue and inflation move more firmly within target, the need for currently extra accommodative monetary policy would start to be reduced, and that the need for
a policy rate increase in order to build policy space in the future would be increasing".
The dissenting member who wanted a 25 basis-point increase felt financial stability risks could affect the sustainability of economic growth over the longer term.
"Rate hike expectations are largely driven by the BoT’s desire to normalise policy rather than any evidence of inflationary pressures," Nomura said in a note on Tuesday.
Thailand's economy expanded at a slower pace in the second quarter after a strong start to the year but the state planning agency kept its 2018 growth forecast at 4.2-4.7% and raised its projection for export gains.