Thailand
Governor: Thai central bank has no need to quickly adjust policy
CHIANG MAI: Thailand’s central bank sees no need to quickly adjust its monetary policy, despite expecting lower economic growth this year, the governor said yesterday.
Monetary policy decisions will still depend on economic data, Bank of Thailand (BoT) governor Veerathai Santiprabhob told reporters in the northern city of Chiang Mai.
“We don’t need to react immediately despite cutting our growth forecast to 3.3% (from 3.8%) this year… because we expect growth to rebound to 3.7% next year,” he said.
The economy is expected to perform better in the second half of this year, helped by a recovery in exports and expected stimulus measures by the new government, Veerathai said.
The central bank has left its policy interest rate unchanged at 1.75% – just half a point above the record low – since raising it by 25 basis points in December.
Its next review policy is on Aug 7.
Some analysts expect it to ease policy later this year as growth slows. ING predicts two 25 basis-point cuts in the second half.
Some Asian central banks that raised rates in 2018 have cut them to boost sagging growth.
Thailand’s policy rate is “quite low” compared with those of other emerging countries, while risks to financial stability remain, Veerathai said.
South-East Asia’s second-largest economy expanded 4.1% last year, the fastest pace in six years, but lagged its regional peers.
Veerathai said the central bank is not happy with “hot” money flowing into the country and has sometimes taken action to temper excessive moves in the baht, but not for an advantage in trade.
The BoT is ready to impose measures if the country receives unusually large capital inflows that would make the baht move beyond economic fundamentals, he said.
“We don’t want short-term money parking here,” he said.
Options would include reducing bond supplies, he said. The BoT last week cut its supply of three- and six-month bonds at auctions in July.
The baht’s strength has also been driven by a weak dollar, Thailand’s large current account surplus, which is expected to be US$29bil this year, Veerathai said.
The baht has appreciated about 5.7% against the dollar this year, making it the best performing currency in Asia. — Reuters
Source: https://www.thestar.com.my/business/business-news/2019/07/09/governor-thai-central-bank-has-no-need-to-quickly-adjust-policy/#TCEtKXsSQMEiClHt.99