BANGKOK — Thailand’s central bank will raise interest rates gradually and in a measured manner to ensure economic recovery as it fights high inflation, its governor said on Wednesday.
Keeping inflation under control in Southeast Asia’s second-largest economy is key but there is “no need for aggressive, heroically large rate hikes,” Bank of Thailand (BoT) Governor Sethaput Suthiwartnarueput told a business forum.
The BoT raised rates for the first time in nearly four years earlier this month and economists expect another increase at the next policy review on Sept. 28.
“We need to make sure the recovery is intact and we get that smooth take-off and that the financial system continues to function well,” he said at the Thailand Focus 2022 forum, adding the BoT was not behind the curve in normalizing policy.
Chances are low for aggressive policy tightening unless necessary, he told reporters on the sidelines of the forum.
The baht has been volatile but there have been no unusual capital movements, and the BoT will only act on excessive moves in the currency, he added.
Inflation should peak in the third quarter before falling back within the BoT’s target range of 1-3% around the middle of 2023, he told the forum.
The transmission of the policy rate to commercial banks’ rates has been slow as the economic recovery remained fragile and uneven, Mr. Sethaput said.
Growth could be about 3% this year and around 4% next year, he said, forecasting faster growth in the third and fourth quarters than in the second quarter as foreign tourist numbers pick up.
Finance Minister Arkhom Termpittayapaisith told the same forum economic growth might reach the top end of a 3.0-3.5% range this year, and that there was ample room for more fiscal stimulus measures if needed. — Reuters