The central bank’s policy interest rate is expected to remain at a low level in the short term to accommodate economic growth during an expected slow recovery.
Bank of Thailand spokeswoman Roong Mallikamas yesterday said the benchmark interest rate could move up or down, depending on Thailand’s economic condition.
However, the current rate is considered suitable to support current growth despite the fact that some countries have adjusted their policy interest rates to maintain financial stability and inflation, she said.
The central bank’s policy interest rate is expected to be in accordance with the trend of its foreign counterparts in the long term, said Mrs Roong.
The central bank’s Monetary Policy Committee (MPC) kept its benchmark interest rate unchanged at its first meeting this year on Jan 22.
It said the current rate is conducive to recovery and that maintaining financial stability remains a cornerstone.
The MPC is scheduled to make another decision on March 12.
The rate-setting committee trimmed the policy rate by 25 basis points to 2.25% at last year’s final meeting in late November to cushion against downside risks that came as political tensions started to grip Thailand.
Regarding new US Federal Reserve chairwoman Janet Yellen’s comments on moves to continue reducing the Fed's monetary stimulus programme, financial markets are expected to price in the same tapering scenario, prompting regional markets to adjust gradually in line with the changes by large economies.
Meanwhile, capital flows are expected to return to emerging markets to chase after better returns in the long term.
Mrs Roong said household debt may swell on the back of delayed payments for rice farmers under the rice pledging scheme since they are identified as indebted low-income earners, but the situation requires further monitoring.
Regarding the World Bank’s 4% gross domestic product growth estimate for Thailand this year, she said that is possible under the conditions of an efficient fiscal budget disbursement and a return of private sector confidence in line with renewed economic activity this year.
Mrs Roong said exports remain the main engine driving growth this year thanks to positive signs pointing to a global economic recovery.
With a sound financial status, private businesses and commercial banks are expected to resume their investment if the domestic political situation stabilises, she said.
Mrs Roong said tourism has usually recovered rapidly in the past after the political situation returned to normal.
The recovery in this sector has been led by Asian tourists, who like short-term travel planning, unlike their American and European counterparts who often think long term.
Domestic consumption excluding durable goods is also expected to regain momentum based on previous central bank studies since consumption of non-durable goods makes up 75% of total consumption, she added.