Bank of Thailand (BoT) governor Sethaput Suthiwartnarueput said on Friday it was appropriate to pause interest rates for now and keep them at a neutral level, following an unexpected hike this week designed to anchor inflation, which remained a concern going forward.
On Wednesday, the central bank unexpectedly raised its key interest rate by a quarter point to 2.50%, the highest in a decade, saying growth and inflation would pick up next year.
The BoT chief told reporters the policy objective was getting the landing right and the current rate was appropriate for the economy.
Mr Sethaput said it would remain that way for a while and was "not that restrictive".
He noted the baht had been volatile but said that was being driven by external factors and Wednesday's rate hike was not to address the weakness of the currency.
Monetary policy would take time to take effect on the economy, he said, adding the interest rate was now the lowest in the region and not high when compared to expectations for inflation, which he remained worried about.
The central bank on Wednesday predicted headline inflation at 1.6% this year and 2.6% next year, with core inflation seen at 1.4% and 2.0%, respectively. The BoT targets headline inflation in a range of 1% to 3%.
Despite cutting its 2023 economic growth forecast to 2.8% from 3.6% projected earlier, the central bank raised its 2024 growth outlook to 4.4% from 3.8%. Last year's growth was 2.6%.
On Wednesday it said growth next year would driven by domestic demand, underpinned by a steady tourism recovery and a turnaround in merchandise exports, with additional support from government policies.
Thailand's economy grew 1.8% in the April-June period on the year and 0.2% on the quarter, sharply slowing from the previous three months, as exports slumped.
The governor also said he would be meeting new Prime Minister Srettha Thavisin on Monday but did not know what the agenda would be.
Central bank chief Sethaput Suthiwartnarueput gives a keynote address at the BoT Digital Finance Conference 2023 on Sept 14. (Photo: Bank of Thailand)