Bank of Thailand sees current interest rate 'robust to many scenarios'
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Bank of Thailand sees current interest rate 'robust to many scenarios'

BoT assistant governor: MPC trying to set neutral rate

A view of the Bank of Thailand. (Photo: Reuters)
A view of the Bank of Thailand. (Photo: Reuters)

Thailand's current benchmark interest rate of 2.5% is "quite robust to many scenarios", Bank of Thailand Assistant Governor Piti Disyatat said on Monday, shrugging off government pressure that monetary policy is too tight.

Mr Piti also said in an interview with Suthichai Live channel that the central bank did not want a high inflation rate, but a rate that is anchored.

The government has been at loggerheads with the central bank for months over interest rates, with Prime Minister Srettha Thavisin calling for a rate cut to revive Southeast Asia's second-largest economy.

Earlier this month, the Monetary Policy Committee held its key interest rate steady at 2.50%, the highest in more than a decade. The next rate review is on Aug 21.

"The committee is trying to set a neutral rate at this point," said Mr Piti, who described the current rate as "quite robust to many scenarios".

Monetary policy can't be the engine of growth, he added.

The BoT forecast economic growth of 2.6% this year, but Mr Piti said it could reach 3% if a government handout scheme is implemented. Last year's growth was 1.9%.

The central bank has previously said it was not worried about inflation and its target range was still in line with economic fundamentals.

Headline consumer inflation in May returned to the BoT's target range of 1% to 3% for the first time in a year.

"We don't want prices to go higher. Because we know that it especially hits the poor people more than the middle income people," said Mr Piti, adding that the central bank was trying to ensure inflation is "well anchored".

"What we aim for is the underlying momentum of inflation over the medium term. So our target of 1% to 3% is definitely a medium-term target and this is the same as other central banks in the world," he said.

The government is seeking to review the inflation target - arguing a change should raise the chance of a rate cut.

"I think... overall in terms of the inflation performance, the main thing is inflation is not causing problems for the households and firms in the way they conduct businesses," said Piti.

The BoT forecast headline inflation at 0.6% in 2024.

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