1 week Ago
Low inflation in Thailand is neither a sign of deflation nor an obstacle to economic growth, according to Bank of Thailand governor Sethaput Suthiwartnarueput. He was responding to a query from Finance Minister Pichai Chunhavajira as to why the inflation rate has stayed below the central bank’s target range for most of the past 12 months. In an open letter to the minister, dated April 1 and made public on Friday, Mr Sethaput said that going forward, inflation was likely to stabilise near the lower band of the 1% to 3% target range, and could fall below during some periods.
Consumer price inflation in March slowed to 0.84% year-on-year, according to the Ministry of Commerce, which forecast a drop to about 0.15% in the second quarter because of softer energy prices.
Ministers in the Pheu Thai-led government have spoken out frequently about the low inflation rate, saying it reflects a weak economy that could use a push from lower interest rates. Mr Sethaput has responded on numerous occasions that what the Thai economy really needs is fundamental reforms and not quick fixes. Inflation expectations were still “anchored in the target range”, Mr Sethaput wrote in the letter.
The central bank chief said low inflation has been driven by supply-side factors and had not impeded competition and investment. Mr Sethaput added that the BoT would ensure inflation would not be too high or too low and that monetary policy focused on managing economic risks. The central bank cut its key interest rate by 25 basis points to 2.
00% in February, reflecting weaker growth prospects. Its next review of monetary policy will take place on April 30..
