Thailand holds interest rate, as MPC forecasts 3.2% GDP growth
The Bank of Thailand's Monetary Policy Committee (MPC) on Wednesday decided to maintain the policy interest rate at 0.50 per cent to support the country’s economic recovery.
MPC secretary Piti Disyata said that the committee forecast GDP growth at 3.2 per cent in 2022 and 4.4 per cent in 2023 due to the recovery in domestic demand and the tourism sector.
He said the Omicron variant of Covid-19 had not affected the economy as much as other waves, while the sanctions on Russia would push up the prices, but it would not affect the overall recovery.
However, economic growth might get pressured by the shortage of materials in some industries and the increasing cost for both the household and business sectors in the vulnerable group.
He added that the inflation rate might hit 4.9 per cent in 2022 but fall to 1.7 per cent in 2023. The inflation rate could be more than 5 per cent in the second and third quarters of 2022 due to the energy prices and the food costs before decreasing in 2023.
The MPC estimated that the high rate might be pressured by cost-push inflation. Meanwhile, demand-pull inflation is still at a low level as incomes are recovering.
The MPC will closely monitor the situation to ensure that the inflation rate in the mid-term will be in line with monetary policy.
He added that the overall currency situation is still stable as liquidity in the currency system is high, but the distribution might be different in each economic sector.
Regarding the exchange rate, he said that the baht has weakened due to the worry about the Ukraine-Russia conflict and forecast that central banks will increase the interest rate.
The MPC has approved close monitoring of developments in the global and Thai currency markets and push the FX ecosystem continuously, especially supporting SME operators by preventing volatility. It also approved financial measures that would support economic recovery in the right aspects, because it is important to create recovery in an uncertain situation. The government should focus on generating revenue and easing the living costs for vulnerable groups and the monetary policy should also support liquidity and help ease the debt situation.
