BANGKOK: Thailand's economic recovery is slow and growth is yet to reach its potential, though there is currently no need to cut interest rates, the central bank chief said on Thursday (July 4).
Bank of Thailand (BOT) Governor Sethaput Suthiwartnarueput (pic) told a news conference that product prices remain high despite lower inflation.
'The current interest is still suitable for the economic recovery and allows inflation expectations to remain anchored within the target," said Sethaput, when asked why the central bank could not cut rates with inflation falling.
The government has been at loggerheads with the central bank for months over interest rates, with Prime Minister Srettha Thavisin calling for a rate cut to kick-start Southeast Asia's second-largest economy.
Despite the pressure to ease policy, the Bank of Thailand bank held its key interest rate steady at 2.50 per cent last month, the highest level in over a decade, saying the level was consistent with the economy and inflation.
The next rate review is on Aug 21.
The economy grew a better-than-expected 1.5 per cent in the first quarter on the year, but the pace slowed from the 1.7 per cent expansion in the prior quarter.
The central bank has forecast economic growth of 2.6 per cent this year and 3 per cent next year. Last year's expansion of 1.9 per cent lagged regional peers.
Last week, the central bank said the economy was expected to grow at its potential rate by late this year or early in 2025.
Sethaput on Thursday put the potential growth rate at about 3 per cent in the 2023-2028 period, down from 3.0 per cent - 3.5 per cent in the decade before the pandemic.
Meanwhile, the BOT has said it expected headline inflation to be below the target range in the third quarter before returning to the range in the fourth quarter.
The annual headline inflation rate was -0.13 per cent in the first five months of 2024. The BOT forecast average headline inflation at 0.6 per cent this year and 1.3 per cent next year. - Reuters
