THAILAND’S central bank chief Sethaput Suthiwartnarueput signalled policymakers will not be rushing to follow up on last week’s interest-rate cut and defended the current inflation target amid government calls to ease policy further and lift the price goal.
“Given that we just recalibrated, I think the bar for taking further rate moves has to be reasonably high,” the Bank of Thailand (BOT) governor said on Tuesday (Oct 22) in Washington. Slowing credit growth was one of the factors that convinced the BOT to cut the key rate for the first time in more than four years, he said.
Future actions will be guided by the outlook for inflation, economic growth and financial stability, he added.
The governor’s remarks suggest the monetary authority will take its time in reducing borrowing costs. That puts it on a collision course with Prime Minister Paetongtarn Shinawatra’s government, which continues to push for lower rates and a higher inflation target to energise a sluggish economy.
Sethaput, who’s meeting with Finance Minister Pichai Chunhavajira later this month to agree on next year’s inflation target, said the current framework has served the economy well. It has kept price expectations anchored and enabled the BOT to deliver a moderate tightening cycle while neighbours jacked up rates higher, he said.
“If you move the band and move it upwards, it would cause expectations to move up” and consequently shift the cost of living higher and bond yields along with it, the governor said. He’s in Washington to attend the annual International Monetary Fund and World Bank meetings.
Earlier on Tuesday, Sethaput reiterated that the recent rate cut was a “recalibration” and that he does not see it as “the beginning of an extended easing cycle”. BLOOMBERG
