The Bank of Thailand is under no “imminent” pressure to raise interest rates like emerging markets peers elsewhere given the nation’s solid buffers and relatively strong currency, governor Veerathai Santiprabhob said.
The central bank is monitoring economic developments closely, including risks to the growth outlook from trade protectionism, Mr Veerathai said in an interview with Bloomberg Television’s Haslinda Amin on Wednesday in Bangkok.
While inflation returned to the 1% to 4% target range, it remains subdued, he said.
"With our strong external position, the need for Thailand to increase the policy rate is not as imminent as other emerging markets,” he said. "We have strong enough buffers so we are not under pressure as other emerging markets that might be vulnerable to the global financial conditions. So we can utilise our monetary policy autonomy to meet the needs of the Thai economy."
Mr Veerathai struck a more hawkish tone last week, prompting some analysts to bring forward their calls for an increase in the benchmark interest rate to later this year. The Bank of Thailand has kept the key rate at 1.5%, near a record low, since 2015.
Kobsak Pootrakool, a former central banker and now minister in the premier’s office, said a rate increase may come at the end of the year or in 2019.
Strong foreign-exchange buffers and current-account surplus have sheltered it from the worst of the emerging-market rout that’s hit neighbours like Indonesia and the Philippines. The baht is down 0.3% against the dollar this year, compared with a 7.3% slump in Indonesia’s rupiah.
The economy grew 4.6% in the second quarter from a year ago after expanding at a five-year high of 4.9% in the previous three months.