Piti Disyatat, Assistant Governor for the Monetary Policy Group The Bank of Thailand (BOT), as secretary of the Monetary Policy Committee (MPC), revealed that the MPC meeting today (November 30) unanimously decided to raise the policy interest rate by 0.25% to 1.25%.
The MPC said the Thai economy is likely to continue to improve. The tourism sector and private consumption will continue to be important drivers of the economy going forward. and to mitigate the effects of the global economic slowdown. Headline inflation in 2023 is likely to be higher than previously estimated mainly from domestic energy prices. but it will continue to fall and return to the target in 2023. The Committee is of the view that the gradual increase The policy interest rate is also a policy guide which is in line with the direction of economic recovery and inflation forecasts . Therefore, the policy rate should be raised by 0.25% per annum at this meeting.
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Thailand’s economy is expected to expand continuously at 3.2%, 3.7% and 3.9% in 2022, 2023 and 2024, respectively. In addition, private consumption is supported by economic activities. Including improved and more evenly distributed employment and labor income. from the tourism sector and private consumption remains an important driving force in 2023 and 2024, although the global economic slowdown will reduce export growth Consequently, the general economic recovery trend remains close to the original, but the global economic outlook remains very uncertain and could slow down more than expected. and the continued recovery of the tourism sector
Headline inflation is expected to be 6.3%, 3.0% and 2.1% in 2022, 2023 and 2024, respectively, peaking in the third quarter of 2022. For 2023, headline inflation is likely to increase. Compared to the previous projection mainly due to the increase in electricity prices. But it will still tend to return to the target frame by the end of the year. Although core inflation tends to be close to the assessment. It will gradually decrease to 2.6%, 2.5% and 2.0% in 2022, 2023 and 2024, respectively. The medium-term inflation expectation remains within the target range, however, inflation risks must be closely monitored . especially transferring costs that could increase and adjust energy prices in countries that are still uncertain.
The overall financial system is stable. Commercial banks have strong capital and reserve levels. The debt serviceability of businesses and households generally improved in line with the economic recovery. However, the financial situation of some small and medium businesses, entrepreneurs and households is still fragile as income has not fully recovered. This will make it more sensitive to higher living costs and a higher debt burden. The Committee was of the opinion that steps should be taken to continuously restructure debts. including the importance of having specific measures and sustainable solutions to debt problems for vulnerable groups
The general financial conditions remained acceptable. Private borrowing costs gradually increased in line with the policy interest rate. but generally still favorable to raising money The amount of credit and funding in the bond market continued to expand. The exchange rate of the baht against the US dollar showed high volatility, mainly due to the direction of the economic and financial policy of major economies. The Committee would monitor developments in the financial markets and fluctuations in the exchange rate carefully.
under the monetary policy framework which seeks to maintain price stability. together with looking after the economy to grow sustainably and reach its full potential and maintain financial stability The Committee assessed that the Thai economy is likely to continue to recover. But there are risks of inflation that must be monitored. Therefore, the policy rate should be raised to a level suitable for stable economic growth. in the long term, gradually under increasing global economic and financial uncertainty going forward. If the outlook for the Thai economy and inflation deviates from the assessment, the Committee is prepared to adjust the size and timing of future policy rate increases.
