Bank of Thailand comfortable with current interest rates
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Bank of Thailand comfortable with current interest rates

The Bank of Thailand (BoT) says the existing policy rate remains appropriate for economic recovery, while inflation is projected to stay within the target range.

The central bank's Monetary Policy Committee (MPC) said it will consider comprehensive scenarios to make a well-informed decision on policy rate movements.

The BoT has continued to increase its policy rate in accordance with the economic situation both globally and locally, in particular in the short- to medium-term, Piti Disyatat, the Bank of Thailand assistant governor for the monetary policy group and the MPC secretary, said on Monday.

"The central bank believes the prevailing monetary policy stance is on the right track. However, we are ready to listen to others, including the government. We will not be dogmatic and are ready to adjust the policy rate in line with economic circumstances," Mr Piti said.

Last week, Prime Minister and Finance Minister Srettha Thavisin held discussions with BoT governor Sethaput Suthiwartnarueput after Mr Srettha, who is also the finance minister, publicly urged the central bank to start lowering the cost of borrowing following months of falling inflation amid higher interest rates.

Mr Piti said the BoT acknowledges that the rising policy rate and lending rates amid an uneven economic recovery had had a broad economic impact on businesses and individuals.

The central bank has continuously implemented financial measures to assist debtors. The measures have been designed and adjusted to match the economic context covering debt resolution measures, liquidity support measures, and measures to maintain the stability of the Thai financial market.

However, monetary policy should not be the only instrument to fix the country's uneven economic recovery and structural problems.

It needs other instruments to improve the economy, solve structural problems, and strengthen the country's competitiveness in the long term.

Moreover, fiscal policy should have a key role in supporting the country's economic growth.

Mr Piti said the economy has continued to rebound from the Covid-19 pandemic.

However, GDP growth is lower than the central bank's earlier forecast because of both internal and external risk factors, particularly a sluggish rebound in terms of inbound tourism and weaker demand for exports.

Even though the number of foreign arrivals is close to the central bank's forecast, foreign tourism income is lower than expected.

The manufacturing sector shrank more than expected as weak global demand trimmed exports.

Furthermore, the country's post-pandemic competitiveness has been sluggish compared with peers.

Meanwhile, competitiveness is a structural problem of the economy which dampens economic growth.

In addition, Mr Piti said the central bank expects headline inflation to continue to decline, with consecutive contractions for this month and next month.

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