Thai cbank says outlook, not short-term data, more important for rates

BANGKOK: Thailand’s central bank will focus more on the broader economic outlook when setting monetary policy to ensure a sustainable economic recovery, not short-term data, senior officials said on Wednesday.

While the slow recovery of tourism and weak exports were weighing on broader growth, “the economic recovery is going as expected, led by domestic demand,” Bank of Thailand (BOT) director Phurichai Rungcharoenkitkul told an analysts’ forum.

The BOT has to “look through the noise” and not be overly sensitive to short-term data which had many uncertain factors, Phurichai said.

On Sept. 27, the Bank of Thailand’s policy committee unexpectedly voted unanimously to increase the one-day repurchase rate by a quarter point to 2.50%, the highest in a decade, saying economic growth and inflation should pick up next year.

Financial conditions in Thailand had tightened but were still supportive of a recovery, minutes of the central bank’s Sept. 27 monetary policy meeting showed on Wednesday.

The central bank cut its 2023 economic growth forecast to 2.8% from 3.6% projected earlier, but raised its 2024 growth outlook to 4.4% from 3.8%. Last year’s growth was 2.6%.

Southeast Asia’s second-largest economy has been hobbled by slackening global growth, particularly in its main trading partner China, and falling investor confidence due to a protracted period without a government following elections in May.

The economy grew 1.8% in the April-June period year-on-year year and 0.2% on the quarter, sharply slowing from the previous three months.

Monetary policy should take into account the growth and inflation outlook, including upside risks from government policies to boost economic activity, the minutes showed.

Inflation was slowing this year but could exceed 3% in 2024 on higher food prices, said Assistant Governor Piti Disyatat, adding that the central bank was closely monitoring price risks. – Reuters